In signs that the UK’s job crisis is worsening, the unemployment rate rose to 4.9 per cent in the three months to October, whilst redundancies hit a record level of 370,000, official figures published on Tuesday revealed.
The employment rate also fell by 280,000 year-on-year, the worst annual fall in a decade, taking the employment rate to 75.2 per cent.
Over the same period last year, the unemployment rate fell to the joint-lowest level since January 1975, at 3.8 per cent.
Employers started to shed jobs over the quarter in the belief that the furlough scheme would close on October 31. The scheme was then extended on the eve of its expiry until next March, with two further self-employment grants also being announced, shortly before England was placed under a month-long national lockdown in November.
“That was when the clock was ticking down to the chancellor’s furlough cliff edge and he was chopping and changing on support for businesses,” said Anneliese Dodds, the shadow chancellor.
Many business groups blamed the chancellor for causing unnecessary job losses, and are now calling for him to commit to maintaining the current level of furlough payments after January, when he is due to review the rate of wage support, as well as offering subsidies for hiring.
“The unwinding of the Job Retention Scheme pushed up redundancies as firms struggled amid covid-19 restrictions. The subsequent extension of furloughing will provide a lifeline for many jobs over the difficult winter months, but the big question is what happens after,” said Tej Parikh, chief economist at the Institute of Directors, adding that companies’ hiring plans were “stuck in neutral”.
The second lockdown also took its toll on the labour market, with experimental statistics from the Office of National Statistics (ONS) showing that the number of employees on payroll fell by 28,000 in November, increasing the total number of job losses since the pandemic hit to 819,000. A third of those were working in the hospitality sector and a quarter were people living in London.
The decline in the number of payrolled employees in November will mostly likely cause a further increase in the unemployment rate, although the extension of the furlough scheme helped to limit the impact of the second lockdown on jobs. Analysts had expected the unemployment rate to rise as high as 5.1 per cent, and the 28,000 lost jobs in November was significantly less than the 476,000 jobs lost during the first lockdown in April.
“We’ve been clear throughout this crisis that protecting lives and livelihoods is our number one priority,” said Rishi Sunak. “We’ve provided over £280 billion of support, including protecting over 9 million jobs with the furlough scheme and supporting millions of businesses to keep going with our loans, grants and tax cuts.
“But we know that, sadly, many people are already facing unemployment. That’s why our Plan for Jobs is also helping to create new jobs, including through our £2 billion Kickstart scheme and expanded apprenticeships and traineeships, to ensure nobody is left without hope or opportunity.”
Samuel Tombs, economist at Pantheon Macroeconomics, said: “The modest decline in the PAYE measure of employment suggests that the extension of the coronavirus job retention scheme at the start of November, on more generous terms for employers than in September and October, has prevented a wave of job losses from materialising.
“Nonetheless, many businesses in the consumer services sector will collapse under the financial strain of Tier 3 restrictions, which likely will continue to be imposed throughout much of England for most of the time until March.”
Ruth Gregory, senior UK economist at Capital Economics, warned that the extension of the furlough scheme was simply delaying the inevitable: “Vaccines won’t come soon enough to hold back the tide of job losses in the coming months, as Covid-19 restrictions remain in place and the government withdraws its support for the labour market.”
Mims Davies, minister for employment, said: “It’s been a truly challenging year for many families but with a vaccine beginning to roll out with more perhaps to follow and the number of job vacancies increasing there is hope on the horizon for 2021.”-
15th December 2020.
