The number of UK workers on payrolls fell by more than 600,000 between March and May as lockdown hit Britain’s labour market, according to the Office for National Statistics (ONS).
The ONS said early estimates showed the number of paid employees dropped by 2.1% or 612,000 in May compared with March.
The number of people temporarily away from work, including furloughed workers, rose by six million at the end of March into April.
The ONS said jobless claims under Universal Credit jumped 23.3% month-on-month in May to 2.8 million and soared 125.9% or 1.6 million since March when the UK was placed in lockdown.
Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked.
“Early indicators for May show that the number of employees on payrolls were down over 600,000 compared with March.
“The Claimant Count was up again, though not all of these people are necessarily unemployed.”
He added: “More detailed employment data up to April show a dramatic drop in the number of hours worked, which were down almost 9% in the latest period, partly due to a six million rise in people away from work, including those furloughed.”
It comes as more than one million people have fallen through the cracks of the Government’s support schemes designed to keep them afloat during the coronavirus crisis, MPs have warned.
The Treasury Select Committee called on ministers to fill gaps in its schemes by finding ways to protect many freelancers and recent employees who have been unable to access support.
MPs said that Chancellor Rishi Sunak must live up to his promise to do whatever it takes to help people through the economic destruction wrought by the Covid-19 pandemic.
“The Treasury’s interventions have been welcomed by many but rolling out financial support at pace and scale has inevitably resulted in some hard edges in policy design and some critical gaps in provision,” the committee said in a report published Monday.
“The Government must assist these people if it is to completely fulfil its promise to do whatever it takes to protect people from the economic impact of coronavirus.”
Hundreds of thousands of newly employed workers are “though no fault of their own” some of those who have fallen through the cracks, the MPs said.
When lockdown first started, the Treasury said it would cover up to 80% of the salaries of workers who were unable to do their job from home.
But those who started a new job after the Government’s February 28 cut-off date are not covered by the scheme.
Although this was later extended by three weeks, many have still been left behind, the committee said.
“Many individuals who had started work before the cut-off date and were still ineligible for support because their employer had not submitted the required paperwork to add them to the payroll,” the MPs wrote.
When they asked Her Majesty’s Revenue and Customs whether employment contracts could be used as evidence, MPs were told it would take too long.
“What we have to do here is get a scheme set up very rapidly; time really has been the enemy of perfection in this,” HMRC said.
The MPs urged ministers to find a way to extend eligibility criteria to all new starters.
The committee also said the Government is failing to help those who have become self-employed within the last year and those whose companies have annual trading profits of more than £50,000.
It also said freelancers and people on short-term contracts, not least in TV and theatre, will not be covered by the schemes, nor are company directors who take their salaries as dividends.
Treasury Select Committee chairman Mel Stride said: “The Chancellor has said that he will do whatever it takes to support people and businesses from the economic impact of the pandemic.
“Overall, he has acted at impressive scale and pace.
“However, the committee has identified well over a million people who, through no fault of their own, have lost livelihoods while being locked down and locked out of the main support programmes.
“If it is to be fair and completely fulfil its promise of doing whatever it takes, the Government should urgently enact our recommendations to help those who have fallen through the gaps.”
A Treasury Spokesperson said: “The swift and targeted action we’ve taken has protected millions of jobs and livelihoods and our interventions have been rightly welcomed by the select committee.
“Our wide-ranging support package is one of the most comprehensive in the world – with generous income support schemes, billions paid in loans and grants, tax deferrals and more than £6.5 billion injected into the welfare safety net.
“All our support is targeted to make sure we use public funds responsibly, helping those who need it most as quickly as possible, while minimising fraud risk.”