The number of people out of work and claiming work-related benefits in the UK jumped 23% to 2.8 million last month as the coronavirus crisis forced thousands of businesses to close.
Highlighting the impact of the pandemic on the workforce, the latest figures for May found that the number of jobcentre claimants increased from 1.24 million in March, representing a 126% increase since the beginning of the lockdown.
The HMRC data showed the impact of the lockdown on the number of people in employment in May following a fall of 2.1% or 612,000 on UK payrolls last month compared with March.
One group of analysts said the increase in claimants represented the most dramatic worsening of Britains labour market for more than 100 years, beating the early period of the 1930s depression.
The year-on-year increase in claimant unemployment was the highest ever recorded, said the Institute for Employment Studies, and went beyond the 1 million increase in claimants seen in the first year following the 1929 Wall Street crash.
Tony Wilson, the institutes director, said: “If the public health crisis is just starting to ease, todays figures show that the unemployment crisis is only just beginning.
“There can be no doubt now that we are on course for claimant unemployment of 3 million by next month, and it may well reach the highest ever recorded.”
Employment expert John Philpott, director of the Jobs Economist, described the data as like “watching the early part of a slow-motion video of a car crash when you already know the horrible outcome but have only witnessed the initial jolt”.
The figures will put pressure on Rishi Sunak to provide further measures to prevent a rise in unemployment over the summer months.
It is understood the chancellor has withstood pressure from No 10 to hold a budget before the summer recess offering tax cuts and employment incentives, arguing that he needs to wait until the autumn to develop a coherent set of policies.
The Office for National Statistics said its May claimant figures were included in the unemployment data to give a more up-to-date indication of the impact on jobs across the country.
Figures based on a standard measure of unemployment covering the three months from February to April also showed records being broken, though not at the rate revealed by the claimant data.
The ONS said the most striking fall was in the total number of hours worked on average each week, which slumped by a record 8.9% in the three months to April 2020.
Job vacancies also fell to their lowest level on record and inflation-adjusted pay fell in real terms for the first time in April since January 2018, the ONS said.
However, the unemployment rate remained steady at 3.9% in April, illustrating the cushioning effect of the governments furlough scheme, which has protected more than 9m jobs.
Government data showed that 9.1 million workers have been furloughed by 1.1 million employers at a cost of ÂŁ20.8bn to the Treasury.
A steep rise in unemployment was averted in March and April after the government introduced a series of grants and subsidies, including the coronavirus job-retention scheme.
Thousands of companies were forced to close down and mothball their businesses in March following the introduction of the lockdown, prompting the Treasury to agree to pay up to ÂŁ2,5000 a month towards the wages of workers who were sent home.
In the three months to March, the unemployment rate had only climbed 0.1 percentage points on last year to 3.9%.
Jonathan Athow, a statistician at the ONS, said some claimants might have left the workforce and not be officially unemployed, leading to a higher claimant number than would be reflected in unemployment figures.
But the early indications were that “the slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked”.
Changes to universal credit rules allow some workers to top up their wages with benefits, though anti-poverty campaigners argued that many people made redundant or suffering a huge drop in hours are prevented from making a claim once their household income is taken into account.
Wilson said the impact was being felt across the country, though some areas were hit more than others.
“Its clear too that this crisis is hitting many poorer areas hardest – with coastal towns and ex-industrial areas seeing particularly big increases in unemployment,” he said.
Tej Parikh, chief economist at the Institute of Directors, said employers were expected to begin making thousands more people redundant as the furlough scheme was phased out between August and October.
“As many as a quarter of firms have said they will struggle to pay anything toward furloughed workers pay come August. More bad news could be just round the corner, as redundancy consultation periods kick in.”
He added that the government must act now to “slash the cost of employment”.
The Resolution Foundation warned that unemployment was set to get “far worse before it gets better”.
It said a second wave of unemployment was expected later in the year as employers struggled to cope with the extra costs of employing staff.
The TUC general secretary,Frances OGrady, demanded “strong action” to prevent a wave of long-term unemployment.
“The labour market is on red alert. The plan for recovery has to prioritise protecting and creating jobs. Getting people back into work is the only way out of recession.”