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Labour market data continues to paint complicated picture in Wales

August 11th 2020

Welsh labour market data and the impact of coronavirus

One of the features of the economic crisis emerging as a result of coronavirus is the complicated and, at times, contradictory labour market data published by the Office for National Statistics. For example, on the one hand, the number of people claiming out of work benefits has surged, on the other, the unemployment rate has remained fairly stable. The latest statistics published today (August 11) by the ONS is no different, with the unemployment rate in Wales remaining unchanged at 2.7%.

There are a number of reasons why the data may be painting such a complicated picture. Despite this, they provide an important indicator of what is going on in the Welsh economy and labour market. The latest data suggests that some of the earliest fears about the impact of the pandemic of certain groups are beginning to be realised.

Fewer women are in work

Across the UK the number of people in employment has seen its sharpest fall for a decade with 220,000 fewer people in work in the three months to June 2020 than in the previous quarter, a 0.2 percent point decrease in the employment rate. In Wales, however, the picture looks slight less negative, with ‘only’ 3,000 fewer people in work over the same period a 0.1 percentage point reduction in the employment rate.

One reason for this may be because a higher proportion of the Welsh workforce works in the public sector. Public sector workers accounted for 20.5% of Welsh workers in March 2020 compared with 16.5% across the UK as a whole. It will be important to keep an eye on the latest public sector employment data, due to be published in September, to see whether this is the case.

While the number of Welsh workers in employment may have reduced less sharply than across the UK there are some concerning trends within the data. All the reduction in the number of people working in Wales can be attributed to women, with number of men in employment in Wales remaining unchanged. The precise reason for this difference is not clear from the data, but this is the latest piece of evidence to suggest that women are being disproportionately hit by the pandemic.

A body of evidence has already emerged that shows women have been more likely to take on the bulk of extra childcare responsibility and home schooling, due to the closure of schools and childcare facilities during the pandemic. This has led to many opting in to be placed on furlough, whilst women were also more likely to work in locked down sectors. The re-opening of schools in September and the restarting of the Welsh Government’s childcare offer may ease some of these pressures, but it seem likely that without significant action, women may be disproportionately hit by the economic impact of the pandemic.

Out of work benefits

After a modest fall in the number of people claiming out of work benefits in June the number of people claiming out of work benefits increased again in July to just shy of 120,000. The number of people claiming out of work benefits increased across all age groups, for both genders and in all local authority areas. Some concerning trends noted in previous data releases are continuing, however.

The number of young people claiming out of work benefit remains a significant concern. A quarter of the new out of work benefits claimants in Wales in July were aged 16 to 24. There are real concerns that this situation could further deteriorate given that young people are disproportionately represented in the sectors of the economy that have been hit hardest by the pandemic.

Equally concerning is the picture at individual local authority level. There are now 10 local authority areas in Wales where more than one in twelve men are claiming out of work benefits, up from 6 local authorities that were faced with the same issue in June. These are Anglesey, Blaenau Gwent, Caerphilly, Cardiff, Conwy, Denbighshire, Merthyr Tydfil, Newport, Rhondda Cynon Taf and Torfaen. Staggeringly 9.6% of men aged 16 to 64 in Newport are now claiming out of work benefits. As the furlough scheme winds down into the autumn with significant potential implications for unemployment, the need for concentrated local auction, rooted within communities, will become greater.

Steffan Evans is a Policy and Research Officer at the Bevan Foundation 

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