Latest labour market data shows huge increase in claimants across Wales

June 16^th saw the latest figures on the impact of Coronavirus on the labour market in Wales. Huw Anslow and Steffan Evans, policy and research officers at the Bevan Foundation, explore what the data mean.

The impact of Coronavirus on the Welsh labour market is becoming clearer. New data released by the ONS demonstrates that, for the second month in a row, there has been a huge increase in the number of people claiming out of work benefits in Wales. Despite the adoption polices to save jobs such as the UK furlough scheme, thousands of people across Wales have seen their jobs vanish, placing them at risk of significant financial hardship.

Out of work benefits

A staggering 8% of working age adults are now claiming out of work benefits in Wales (seasonally adjusted). Following a 3.3 percentage point increase in the number of people claiming out of work benefits in April 2020, May’s 0.8 percentage point increase dwarfs any month on month increase since the last financial crisis, demonstrating the scale of the challenge. This increase means that in May 2020 118,600 people were claiming out of work benefits in Wales, compared with 60,265 in March, and 53,940 in May 2019.

The fact that the proportion of the population claiming out of work benefits has continued to increase highlights the risk of the Welsh labour market suffering long term damage. The initial spike in claimants in April was to some extent expected given that huge swathes of the Welsh economy was forced to shut down. The fact that the number of claimants continued to increase at historically high levels into May suggests that even with the roll-out of the UK Government’s furlough scheme, many employers are struggling or are making plans to operate with fewer workers in the future.

Out of work benefits – impact by key characteristics

The claimant count has increased in every local authority, with Newport (7.5%), Merthyr Tydfil (7.2%) and Blaenau Gwent (7.2%) recording the highest rates.  The impact of Covid-19 has affected workers of all ages. The number of people claiming out of work benefits has roughly doubled for all age groups. The increase in the number of 16-24 year olds claiming out of work benefits is especially concerning. There are now over 25,000 young people in Wales claiming out of work benefits. There’s a wealth of evidence that suggests that the long-term employment prospects of young people who spend a period unemployed are worse than their peers who remain in education or in work. There is therefore an urgent need to consider adopting policies to assist the young people who have been impacted by this crisis.

Male employment appears to have been hit particularly hard by the measures put in place to stop the spread of Coronavirus. The claimant rate for men has increased 120% in just two months and now stands at 9.7% (seasonally adjusted), meaning that nearly 1 in 10 working age men who are now claiming out of work benefits. The claimant rate amongst women has increased by 80%, standing at 6.2% (seasonally adjusted).

Government support

This data does not give a complete picture of how the Coronavirus is affecting the labour market in Wales – it is still too early to understand the true impact. However, what we can already observe reinforces the need to continue the furlough scheme. The Welsh and UK Government also need to consider how they can expand the provision of support for those who have already lost their jobs, to ensure these people are helped back into work as soon as possible.