Coronavirus: Job losses ‘just the tip of the iceberg’

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The boss of the UK’s largest recruitment firm, Reed, has said he fears current trends suggest far more people are going to lose their jobs because of the coronavirus crisis.

James Reed predicted the unemployment rate could reach 15%, meaning five million people could be out of work.

He said recent job cuts by firms were «perhaps just the tip of the iceberg».

Reed has seen job advertisements drop by two-thirds, while applications per job are rising.

This week Bentley, Aston Martin, car dealership Lookers and engineering giant Rolls-Royce have all announced job cuts.

Speaking to the BBC’s Today programme, Mr Reed said more losses could be on the way since small businesses do not have to give advance notice of lay offs, as big companies do.

«My concern is that the data that we’re seeing, which is that the number of jobs advertised is down two-thirds and has been consistently for two months now, suggests that there could be a lot more job losses to come,» he said.

He predicts unemployment will rise sharply in the autumn, when the government’s furlough scheme comes to an end.

Mr Read said some people had predicted unemployment could reach levels not seen since the 1980s, when the jobless rate reached 11.9%.

«I fear it could be a lot worse than that, it might be more like the 1930s,» he said.

Currently, 8.7 million UK workers are receiving payments on the Job Retention Scheme.

The government has confirmed the scheme will run to the end of October, but by then employers will be paying a fifth of workers’ salaries.

«It’s very difficult for those businesses to re-employ all the people they’ve got furloughed,» Mr Reed said. «So I’m dreading this day of reckoning where they decide they’re not going to do that and a lot more people will become unemployed.»

Mr Reed said some industries were seeing a rise in recruitment, particularly in health and logistics, but huge sectors of the economy, such as leisure and tourism, remained completely shut down.

He added it was important for the economy to get going again in the next two or three months, or it would be hard for some firms to recover, and he called for clarity soon on how businesses can reopen.

In the early weeks of lockdown, claims for universal credit, the benefit for working-age people, hit a record monthly level of 1.5 million claims.