The number of workers on UK payrolls has fallen by 649,000 between March and June, official figures indicate.
The number of people claiming work-related benefits – including the unemployed – was 2.6 million.
However, the total was not as big as many feared, because large numbers of firms have put employees on the government-backed furlough scheme.
Economists say the full effect on employment will not be felt until the scheme ends in October.
The Office for National Statistics (ONS) said that since the start of the coronavirus pandemic, total weekly hours worked in the UK had fallen by a record 175.3 million, or 16.7%, to 877.1 million hours.
“This was the largest annual decrease since estimates began in 1971, with total hours dropping to its lowest level since May to July 1997,” the ONS added.
“Vacancies in the UK in April to June 2020 are at the lowest level since the survey began in April to June 2001, at an estimated 333,000; this is 23% lower than the previous record low in April to June 2009.”
The figures came as a survey by the British Chambers of Commerce said 29% of businesses expected to decrease the size of their workforce in the next three months. The BCC called for a cut in employers’ National Insurance contributions to protect businesses and jobs.
“Despite the lack of overall increase in the number of unemployed, the estimated number of people unemployed aged 16 to 24 years increased by 47,000 on the year while other age groups remained steady,” said the ONS.
The ONS added that a larger than usual number of those losing their jobs were not currently looking for another one and were therefore economically inactive rather than unemployed.
“In addition, an increased number of respondents who were previously unemployed have moved to economic inactivity,” it said, “suggesting that some who were previously unemployed are no longer looking for work.”
Jeremy Thomson-Cook, chief economist at financial services firm Equals, said: “The furlough scheme has made the monthly reading of job numbers rather meaningless, given nine million people are technically neither employed nor jobless.
“The only guarantee is that some will be looking for new work as the scheme winds down, and some will not be able to given changes in their living circumstances driven by the pandemic.
“Wage growth has fallen, which could either be caused by lower paid workers re-joining the workforce, or from employers failing to top up furloughed wages when they previously had. As with all jobs data at the moment, we have to look through the prism of the furlough system to see what’s what.”
Matthew Percival, the CBI’s director for people and skills, said: “These figures show serious difficulties for hundreds of thousands of people, but unfortunately this is still only the beginning of the impact on the labour market. Flattening the unemployment curve will remain paramount.”