Britain's jobless rate rises to 4.8% while redundancies reach record high

Redundancy levels surpassed the last quarterly high set after the 2009 global financial crisis

epa08800734 A city worker walks past the Lloyds building in the City of London, Britain, 05 November 2020. Britain has begun its second national lockdown. This comes as news reports state that Covid-19 related deaths in Britain have increased by 46 percent in less than a week.  EPA/FACUNDO ARRIZABALAGA

Britain’s unemployment rate rose to 4.8 per cent in the three months to September – the highest level since 2016 as the coronavirus pandemic saw employers cut more jobs.

The unemployment rate rose 0.9 percentage points on a year earlier and 0.7 percentage points on the previous three-month period, according to the Office for National Statistics. Meanwhile, redundancies reached a record high of 314,000, an increase of 181,000 on the previous quarter, which surpassed the quarterly record in the wake of the global financial crisis in 2009.

UK finance minister Rishi Sunak said the figures "underline the scale of the challenge" the country is facing.

“I know that this is a tough time for those who have sadly already lost their jobs, and I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected and protect the lives and livelihoods of people across this country,” he said.

Mr Sunak last week extended the country's coronavirus furlough scheme until the end of March to help cushion the blow of a second lockdown. The extension to the job retention scheme, which provides 80 per cent of the pay of temporarily laid-off workers up to a maximum of £2,500 ($3,291) a month, came on the same day the Bank of England injected a further £150 billion into the economy.

However, the number people on company payrolls has dropped by 782,000 since the start of the pandemic in March as government restrictions aimed at slowing the spread of coronavirus forced many businesses to lay off workers, while some shops and restaurants have closed for good.

September's rise in the unemployment rate from 4.5 per cent in August to 4.8 per cent suggests that the previous scaling back of the furlough scheme took its toll, according to Ruth Gregory, senior UK economist at Capital Economics.

“With the second lockdown set to send the recovery into reverse, the unemployment rate may yet climb to about 9 per cent next year,” she said.

When the government looked to roll back on the furlough scheme and asked firms to shoulder a greater burden of the cost of their furloughed employees, firms reduced their staffing levels at a sharp pace in September, said Ms Gregory, causing a bigger decline in employment than expected.

Beyond the headline data, employment among 16 to 24-year olds is at a record low, falling by 174,000 in work between July and September to 3.52 million.

By contrast, the number of people aged over 65 who are working increased by 66,000 in the quarter, to 1.32 million.

“Older people past retirement age appear to be choosing to hang on to their jobs or find new work, possibly because of the impact of the pandemic on their retirement pots,” said Becky O’Connor, head of pensions and savings for interactive investor.

“Young people could be paying for the impact of the pandemic for decades to come. The drop in employment for 16 to 24 year olds is worrying not just for now, but also their career progression, pay and pensions later on.”

EDITOR'S PICKS
NEWSLETTERS