The number of workers on UK payrolls has fallen by 649,000 between March and June, official figures indicate.
The number of people claiming work-related benefits – including the unemployed – was 2.6 million.
However, the total was not as big as many feared, because large numbers of firms have put employees on the government-backed furlough scheme.
Economists say the full effect on employment will not be felt until the scheme ends in October.
Because of the effect of the furlough scheme on the employment market, analysts say the number of hours worked per week is currently a truer reflection of the impact of the coronavirus crisis.
The Office for National Statistics (ONS) said that since the start of the pandemic, total weekly hours worked in the UK had fallen by a record 175.3 million, or 16.7%, to 877.1 million hours.
«This was the largest annual decrease since estimates began in 1971, with total hours dropping to its lowest level since May to July 1997,» the ONS added.
«Vacancies in the UK in April to June 2020 are at the lowest level since the survey began in April to June 2001, at an estimated 333,000; this is 23% lower than the previous record low in April to June 2009.»
The figures came as a survey by the British Chambers of Commerce (BCC) said 29% of businesses expected to decrease the size of their workforce in the next three months. The BCC called for a cut in employers’ National Insurance contributions to protect businesses and jobs.
At the same time, the Resolution Foundation think tank said the way the UK reports unemployment may not reflect the «true scale of joblessness».
The ONS said: «Despite the lack of overall increase in the number of unemployed, the estimated number of people unemployed aged 16 to 24 years increased by 47,000 on the year while other age groups remained steady.»
It added that a larger than usual number of those losing their jobs were not currently looking for another one and were therefore economically inactive rather than unemployed.
«In addition, an increased number of respondents who were previously unemployed have moved to economic inactivity,» it said, «suggesting that some who were previously unemployed are no longer looking for work.»
The government’s spending watchdog, the Office for Budget Responsibility, has warned that in the worst-case scenario, unemployment could rise to four million.
‘Your mood plummets’
Theatre technician Charlotte Baker, 29, is out of work as a result of the coronavirus crisis.
She started a new job at the Fairfield Halls in Croydon in September last year and was furloughed in March.
Last month, she was made redundant, even though she could have been kept on furlough.
«Your mood plummets, your mental health and it’s just been very difficult living in limbo essentially,» she told the BBC.
«I obviously just started this new job which I absolutely loved and me and my partner wanted to buy in Croydon – we were looking at buying our first property together and that’s been put on hold.
«It’s difficult as well – as some people are getting back to normal, we get certain freedoms back, there are people like me and a lot of people I know that are very much in the depths of this and don’t know what’s going to happen.»
«What I’m looking at is whether to take my life in a new direction, whether to choose a new career, possibly looking at training.
«I’m thinking of doing a carpentry course. I could then potentially live off that, or hopefully if my job comes back, I bring those skills back into this job. But it is difficult, very hard.»
Jeremy Thomson-Cook, chief economist at financial services firm Equals, said: «The furlough scheme has made the monthly reading of job numbers rather meaningless, given nine million people are technically neither employed nor jobless.
«The only guarantee is that some will be looking for new work as the scheme winds down, and some will not be able to given changes in their living circumstances driven by the pandemic.
There’s a storm coming: the government’s official number-crunchers – the Office for Budget Responsibility – have warned that unemployment could hit 4 million this year.
But the bulk of that is yet to hit the numbers. The normal counts of employment have been propped up by support schemes: over 11 million private sector workers are still on the government payroll. Those plans have been very effective in staving off a greater crisis as lockdown hit.
The looming turmoil and hardship is clear however, with average real pay – that’s after inflation – 1.3% lower than a year ago in May and the number of job vacancies at a record low.
The number of people counting as self employed has fallen a record 178,000.
As employers now look towards the winding down of support schemes, the announcements of layoffs are now multiplying. Despite the Chancellor’s new plan, a big rise in joblessness still seems inevitable.
The challenge is to getting people back into work – particularly younger ones, the group most likely to have been furloughed. Lengthy unemployment, especially at the start of a career, can blight livelihoods and prospects for decades.
And while the economy is opening up, the uncertain outlook may make employers reluctant to do the same with hiring.
«Wage growth has fallen, which could either be caused by lower paid workers re-joining the workforce, or from employers failing to top up furloughed wages when they previously had. As with all jobs data at the moment, we have to look through the prism of the furlough system to see what’s what.»
Matthew Percival, the CBI’s director for people and skills, said: «These figures show serious difficulties for hundreds of thousands of people, but unfortunately this is still only the beginning of the impact on the labour market. Flattening the unemployment curve will remain paramount.»
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