UK unemployment rate is 3.9%. Payroll data shows jobs lost.

services workplace meeting

The UK unemployment rate is 3.9%.  However, UK payroll data shows over 650,000 jobs lost since March.  The impact of the pandemic lockdown seems to explain this contradiction.

UK unemployment rate is 3.9%.

According to the ONS*, the official rate of unemployment in May is 3.9%.  This is very similar to previous months and is still at historic low levels.  The number of people employed is 76%, with the rest “economically inactive”, or not looking for work, such as students.

This graph shows unemployment back to 1971.  You can see that by historic standards, unemployment is actually quite low at the moment.

UK unemployment rate

For the latest numbers, whilst the number of self employed workers dropped by 178,000, the number of people in work compensated for this.

But Payroll numbers have dropped over 650,000.

According to the ONS*, the number of employed people (on a payroll) has dropped by 650,000 in the March to June period.

At first sight, this seems to contradict the official unemployment numbers.

The ONS have explained that there seems to be about 0.5 million of us who are not working, not on official furlough (called the Job Retention Scheme), and not being paid.

Is there an informal furlough arrangement in place for 0.5 million people?

So how can 0.5 million workers not be either employed, unemployed or self employed?

According to the ONS, this group are saying that their job is currently not available due to the lockdown so they consider themselves to be on unpaid furlough; they expect their job to be available again once the economy fully opens up.  Therefore this group do not see themselves as unemployed and are not looking for other work.  For want of a better name, this seems to be a type of unofficial, and therefore unpaid, informal furlough which is simply not counted anywhere else in the employment data.

Numbers claiming benefits has seen a massive increase since March.

What makes this more interesting is the Claimant Count also fell in June by 28,000.  The Claimant count measures those of us who are claiming Universal Credit; either due to unemployment or low income.  However, a total of 2.6 million of us are currently claiming Universal Credit.  So although the number fell slightly in June, this is still an increase of 112% since March.

This chart from the ONS shows the recent massive increase in Universal Credit claims;

ONS Universal Credit chart unemployment

So what does this all mean?

According to Jonathan Athow of the ONS;

“As the pandemic took hold, the labour market weakened…there are now almost two thirds of a million fewer employees on the payroll than before the lockdown…

The Labour Force Survey is showing only a small fall in employment, but shows a large number of people who report working no hours and getting no pay.

There are now far more out of work people who are not looking for a job than before the pandemic”


Learn more about the latest unemployment figures from the ONS Press Release


The ONS* are the Office for National Statistics and are the official government agency providing economic data.

Some numbers above are rounded to make the article easier to read.  Full details in the Press Release.