Labour market data shows unemployment in Wales is on the rise

Welsh labour market data and the impact of coronavirus

It’s official: unemployment in Wales is increasing.

Since the Coronavirus pandemic began, the evidence has largely been failing to match up with the reality of the labour market in Wales. Despite much of the economy being in lockdown, and with restrictions ramping up again this week, the previous months have painted a contradictory picture of the effect on employment.

Today, this started to come to an end as the unemployment rate for the period May-July increased to 3.1%. Although this is only a relatively modest increase on the 2.7% rate in April-June, it tells us that the labour market in Wales is starting to reflect the actual economic impact of the pandemic. This is especially concerning given that the Job Retention Scheme is still in place, providing substantial protection against job loss.

The latest figures unemployment figures will only increase fears for what will happen to workers in Wales once the JRS scheme is wound down at the end of October. Some sectors are more at risk than others: almost 4 in 5 hospitality workers in Wales are furloughed and, with the drop in commuter traffic and city centre footfall likely to continue, the workforce in the whole sector could be decimated.

Out of work benefits

Whilst the modest uptick in the unemployment rate in the latest data is the first increase since the outset of the pandemic, the data on the number of people claiming out of work benefits has behaved very differently over the past six months. The number of people claiming out of work benefits in Wales has more than doubled since March. Despite there being some limitations about what the data can tell us about the jobs market, it does provide another indicator as to what is going on with the Welsh economy.

In this light it is particularly concerning that the number of people claiming out of work benefits in Wales is continuing to increase. There are now over 120,000 people claiming out of work benefits in Wales, with around 2,500 more people claiming out of work benefits in August than in July.

There has been a change in the age profile of new claimants. The number of people aged 16-24 claiming out of work benefits had been increasing at a faster rate since the outbreak of the pandemic. The latest round of data paints a slightly different picture. Only an additional 80 people aged 16-24 are claiming out of work benefits compared with July with more sizeable increases for older workers. More data are needed however, before concluding whether this may be part of a broader slow down in the number of young people who are out of work.

Another feature of this crisis so far has been its differing geographical impact. Whilst only 4.7% of people over 16 are claiming out of work benefits in Ceredigion this raises to 7.3% in Merthyr Tydfil. 16 of Wales’ 22 local authorities did see an increase in the proportion of workers claiming out of work benefits between July and August, however, with no authority seeing a decrease. Staggeringly 9.6% of men in Newport, nearly 1 in 10 are now claiming out of work benefits.

What next?

The furlough scheme is due to end in less than two months. While it has been a vital lifeline, the job cuts seen in the latest data have happened despite it being in place. Once the scheme ends, many of the over 400,000 workers still furloughed in Wales will be left at the mercy of a contracting labour market. With local lockdowns and the threat of more national action, it promises to be a challenging winter for many of these workers.

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