Coronavirus: Scottish jobs market hardest hit as lockdown bites

The number of people out of work in Scotland rose by around 16,000 to 113,000.

The figures covered just a single week of the lockdown, which began on March 23 and saw shops, pubs, restaurants, workplaces and building sites closed en masse.

The figures are expected to be far more dramatic for April, despite furloughed staff and those on self-employment support still being officially classed as “in employment”.

READ MORE: UK unemployment rises by 50,000 after coronavirus hits labour market 

The ONS also reported experimental UK data for Jobseeker's Allowance and Universal Credit showed a 69.1% jump in jobless claims between March and April to 2.1m. 

The claimant count rose 66.9% to 186,000 in Scotland as an estimated 74,600 people applied for financial support.

Nicola Sturgeon annunced an extra £33m to help people back into work after the "economic emergency" driven by the measures to fight the disease.

The early data follows warnings the Scottish economy may be particularly vulnerable to the pandemic because of a heavy reliance on tourism, hospitality and oil and gas.

The Scottish Government’s chief economist last month suggested the Scottish economy could shrink by 33% during the lockdown, with potential “long lasting impacts”.

Even if the lockdown were over by the summer, GDP could be down 12% over the year as a whole, three times the loss of Scottish GDP caused by the 2008 financial crash. 

The quarterly 0.6 percent point rise in unemployment in Scotland compared to a 0.1 for England and the UK as a whole, 0.3 in Wales and no change in Northern Ireland

However the unemployment rate was higher in four of the nine English regions than in Scotland - the North East (5.4%), Yorkshire and the Humber (4.3%), the West Midlands (5%) and London (4.7%)

The employment rate fell by 0.3 points to 74.7% in Scotland over the quarter, a drop of 14,000 jobs to 2.67m, but rose 0.2 points to 76.6% for the UK, a gain of 211,000 jobs.

In England, the employment rate was up 0.2 points to 77.1%, in Wales it fell 0.1 points to 74.3%, in and it was flat at 72.4% in Northern Ireland.

The annual changes were also worse in Scotland than in the UK.

In the year to March, unemployment in Scotland rose 0.8 points, compared to a 0.1 point rise for the UK, and falls of 0.5 and 1.3 points in Northern Ireland and Wales respectively.

The Scottish employment rate fell 0.8 points against a UK-wide rise of 0.6 points in the year, a 0.8 point rise in England, a 1.1 point rise in Northern Ireland and a 1.1 point fall in Wales.

At the daily Scottish Government briefing, Ms Sturgeon said the rise in unemployment "undoubtedly further demonstrates the need to carefully get our economy moving again as quickly as we are able to do that safely".

She added: "We know that the essential public health measures that we have had to take to deal with what is a public health emergency are in themselves creating an economic emergency.

"We will be investing a further £33m to support people back to work as we gradually get the economy opened up again."

She said most of the funds would go to the Fair Start Scotland scheme to help "those most adversely affected", including young people, disabled and lone parents.

"We are determined to do everything we can to protect Scotland's workforce, to minimise as far as we can the increase in unemployment, and also to ensure that we are ready for a sustainable recovery," she said.

Scottish Secretary Alister Jack said: "As expected, the impact of coronavirus is now starting to show in the labour market statistics and will do for some time to come.

"The UK Government is doing everything in its power to protect the livelihoods of Scottish people during this unprecedented pandemic and will continue to do so.

“Our Job Retention Scheme has ensured thousands of people in Scotland continue to get paid while they are unable to work and this is in addition to the £3.7bn package already given to Holyrood to help tackle the crisis.

"These actions mean the UK economy will be able to bounce back when circumstances allow.”      

The Scottish Government also said it had ordered the body overseeing Scotland’s enterprise agencies to focus on tackling the economic challenges of the Covid crisis.

READ MORE: Coronavirus: Fears for long-term future of Scotland's visual arts 

Business minister Jamie Hepburn said the quarterly changes compared well against historical records, but did “not reflect fully the unprecedented impact of the pandemic”. 

He said: “The Job Retention [furlough] scheme will have offered some relief to many employers and employees, but I am aware many will be deeply concerned about the future of their livelihoods.

“We are acutely aware of the huge impact the lockdown measures are having on people and businesses throughout the country. However, these measures are vital for controlling the coronavirus outbreak, saving lives and protecting the NHS.

“The Scottish Government has already provided £2.3bn in support to businesses and livelihoods, and we will continue to do everything in our power to support employers and employees.

“Recognising that our economic response to this crisis needs to be urgent, wide-ranging and co-ordinated, the Enterprise and Skills Strategic Board, responsible for coordinating the activities of Scotland's enterprise and skills agencies, will refocus their attention, capacity and efforts on addressing the economic challenges presented by this pandemic. 

“The Board will establish urgently how the Scottish Government, agencies, businesses and local government can collaborate to support the restart of our economy, mitigate the rise in unemployment as we recover from Covid-19 and help those who have lost jobs get back to work.

“Over the coming weeks I will work closely with the Board and business community as we begin to set out clearly – and in detail – the package of support to be made available to individuals and businesses to restart our economy and to aid quick recovery from this crisis.”

Dr Stuart McIntyre, Head of Research at the Fraser of Allander Institute, said: “The data today are the beginning of the process of understanding how Covid-19 is reshaping the Scottish labour market.

“It’s important to note that these data only cover the period to the end of March, and therefore only capture the very beginning of the lockdown itself.

“With those on furlough, as well as those on the Self-Employment Income Support Scheme, still being classed as being ‘in employment’, the drop in the employment rate of -0.3% this quarter is smaller than might have been expected.

“However, we can see from the data emerging from the welfare system that there has been a notable uptick in people registering as unemployed in April.

“Experimental data from ONS suggest that around 75,000 more people in Scotland were claiming out of work support in April compared to March.

“In time, and as the furlough and self-employment support schemes are wound down, we will start to see some of those whose employment has been maintained through this crisis lose their jobs.

“It is important as this economic crisis unwinds that those who do lose their jobs are supported to get back into work quickly – and government will need to respond quickly in providing employment and skills support.”

The Federation of Small Businesses, 8% of whose members have applied for Universal Credit because of the lockdown, said sole traders had been “left in the dark” about their prospects under the Treasury’s jobs retention scheme. 

Although this is being extended to September for employees, it is unclear whether it will be extended for sole traders beyond the end of June.

FSB National Chairman Mike Cherry said: “While employees have been given some certainty about the months ahead following a much-needed extension of the job retention scheme, sole traders have been left in the dark.

“More than two million self-employed people have applied for the self-employment income support scheme which is encouraging. 

“But they’re now facing a total earnings cliff-edge in less than two weeks’ time. Many work in sectors which will be among the last to have restrictions eased.

“Thousands are fearing for their futures. They need assurances urgently.  

“Keeping people in work – whether they’re employees or self-employed – will be critical to reducing a scarring of the economy and achieving a v-shaped recovery.”