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Furlough wage support schemes may hide true economic picture in Wales

The unemployment headline figures in Wales and the UK are only a small part of what is going on in the economy this summer. The data in relation to the number out of work benefits claimants, economic activity, the numbers on the UK payroll and the total numbers of hours worked makes interesting reading.

Data released by the Office for National Statistics shows that the UK unemployment rate held steady at 3.9% in the three months to April whilst in Wales the figure was lower at 3%. However, the data also revealed that there was a fall of 15,000 in the total number employed in Wales, compared with the same period last year.

These headline figures may hide the reality that it is the massive furlough wage support schemes brought in by the UK government that has kept the unemployment rate at a lower level than was expected.

Whilst the total number of people unemployed in Wales during those three months stood at 47,000 the number of people claiming out-of-work benefits in Wales has doubled compared with the same time last year. Across the UK the total has increased significantly by 23% in May to reach 2.8 million people.

In Wales, the total number of out of work benefits claimants was 118,600 in the middle of May, which is 6.2% of people between the ages of 16 to 64.

Wales also continues to have a high rate of economic inactivity. That is people not in work and not available for work because they are ill, caring for someone or in full time education – 23.2% of 16 to 64-year-olds in Wales are in this category, higher than the same period last year.

Only Northern Ireland has a higher rate at 26.7%.

Another indicator of how at present the furlough schemes masks what is taking place in the real economy is that the number of UK workers that are on the HMRC payroll data dropped by more than 600,000 between March and May.

The impact of the lockdown can also be exemplified in the number of hours worked. Between February and April there was an 8.9% fall in the number of hours people worked.

That is the largest decrease in hours worked since 1971.

It is important to remember that all this data only reflects the impact resulting from the first six weeks of the lockdown period across the UK, in which almost nine million workers have been furloughed. Some 420,000 in Wales

The full impact on jobs and the economy, therefore, will not be fully realised until after August when the wage support schemes are reduced and then later in October when the schemes, on present government intentions, will end.

As Clwyd West Conservative MP David Jones said: “The biggest concern is the autumn when it runs down completely. It’s clearly not an optimistic outlook.”

Looking forward there are worrying times ahead, not just for the traditional manufacturing, construction, retail and other sectors but particularly for tourism, hospitality and the economies of west and northwest Wales.

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