Latest ONS employment figures highlight growing need for short-term credit
Commentary | 16/10/19
The latest employment figures from the Office of National Statistics published earlier this week, have reported an unexpected increase in the unemployment rate to 3.9% in the June-to-August period after the number of people in work fell by 56,000.
The combined effects of a global slowdown, political uncertainty and Brexit have impacted high street retail jobs and the manufacturing sector where a number of redundancies have taken place. As Brexit-related uncertainty has continued, many firms are deferring significant hiring and investment decisions, so a softening of the labour market could well be expected to continue in the short term, at least.
As noted by the JCRA, the labour market seemed to have been isolated from the overall weakening of the economy this year, but the steepest fall in employment in over four years shows businesses are getting ready for Brexit by cutting jobs. Combined with reports pointing to consumer spending also now slowing, this may be indicative of more uncertainty in the jobs market and could result in economic output turning negative, as we saw in the second quarter.
Even a short period of unemployment can hit a significant number of hard pressed consumers who may need access to responsible credit to see them through a short period of financial upheaval, especially when many are on zero hour contracts or form part of the gig economy.
While regulation of credit is required to ensure firms lend responsibly it is important the regulators and politicians alike ensure access to credit is maintained and safeguarded as consumers may have a justifiable need to smooth out occasional erratic incomes.
Access to fair and reasonable financial products from regulated lenders who undertake robust affordability checks on borrowers, and operate fair, transparent charges will help support those consumers who are struggling to manage their cash flow or need help to cover emergency, unexpected costs.