The UK has a 6.2 million ‘Covid employment gap’ of lower employment and furloughed employees who need to get back to work, highlighting the scale of the economic task ahead of us, the Resolution Foundation said today in response to the latest ONS labour market statistics.

The latest data showed a labour market in deep freeze in early 2021, with employment, unemployment and total hours worked all down slightly in the three months to February.

However, the number of job vacancies increased by 16 per cent between February and March, suggesting that the labour market is starting to thaw as some parts of the economy – such as non-essential retail and outdoor leisure and hospitality – reopen in April.

But while the latest data hints at some green shoots of recovery, the Foundation warns that the UK faces a huge task in getting the economy back to normal – such as closing its 6.2 million ‘Covid employment gap’.

This gap includes the 827,000 fall in payrolled employment since the pandemic started (between February 2020 and March 2021), an estimated 600,000 fall in self-employment over this same period, and the 4.7 million employees who were fully or partially furloughed in March, according to separate ONS data.

The key challenge facing businesses and the Government is to close as much of this gap as possible before the furlough scheme is unwound at the end of the Summer, in order to limit the scale of rising unemployment due later this year.

Nye Cominetti, Senior Economist at the Resolution Foundation, said “The UK labour market remained in a deep freeze in early 2021, though the sharp increase in vacancies in March ahead of retail and outdoor social activities reopening in April suggest it is starting to thaw at last.”

“But the UK currently has a Covid employment gap of 6.2 million people who need to get back to work. This highlights the true scale of the labour market challenge ahead of us as economy reopens, that can be hidden by just looking at employment numbers.”

“Unless this gap is closed before the furlough scheme ends in September, we are likely to see a worrying rise in unemployment later this year – which will extinguish many people’s hopes of a post-Covid living standards recovery.”