Unemployment is expected to rise in the UK, although recruitment will remain strong after the vacation program ends, research suggests.
The Resolution Foundation predicted that the labor market will have a “bumpy ride” when the government program expires at the end of the month.
The think tank says the program was an “overwhelming success” and has protected over 11 million jobs since March 2020, while an expected Covid-related rise in unemployment has not occurred.
However, the Foundation added that with around 1.7 million workers still on vacation at the end of July and the rate at which people are coming off vacation is stalling, the job market is “nowhere near healthy” .
His report showed that if vacation rates continued to decline at the same pace as they did between April and June when the economy reopened, about 900,000 workers would still be in the program when it closed.
Many of these employees will be returning to their previous jobs, but the think tank said companies likely do not have the capacity to immediately recruit all employees who have previously been on leave.
Unemployment could rise by around 150,000 in the fall, it was forecast.
Hannah Slaughter of the Resolution Foundation said, “The vacation program has saved 11 million jobs and prevented an unemployment disaster. However, as the program expires in less than four weeks, there is great uncertainty about what will happen besides the job market.
“Up to 900,000 workers could still be drawn upon completion of the program, although most are likely to return to their previous jobs.
“With companies already reporting ‘recruitment bottlenecks,’ even a renewed rise in employment is unlikely to be enough to prevent unemployment from rising this fall.”
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