That’s probably due to a range of factors. Obviously, opportunities at restaurants, pubs and shops are limited by lockdown restrictions. Also, the ONS reported last week that 86% of companies were trading in September – the remainder are unlikely to be hiring many new starters.
The end of the furlough scheme means struggling firms are assessing which staff to keep on, rather than whether to take on more.
Vacancies are still 40% below last year’s levels – despite rising in the last quarter after a record slump in April-June.
It’s a dire situation for young people who left education last summer. Dr Joe Marshall, Chief Executive of the National Centre for Universities and Business, says younger people are being ‘disproportionately hit’ by the crisis – and need more help.
“The new figures published today by the ONS further demonstrate the severity of the unemployment problem we are facing in the wake of Covid-19.
Today’s new statistics reveal that the number of employees in the UK on payrolls is now down around 673,000 compared with March 2020. What’s more, redundancies have reached the highest level since May to July 2009, in the midst of the last global recession. More worryingly still, recent patterns demonstrate that this problem has impacted the nation’s young people disproportionately. The Resolution Foundation has recently warned that youth unemployment could rise to around 17%, the same level as the early 1980s peak – we therefore urgently need to do more to help young people. We need to see further decisive action from the Government to reverse the huge falls in employment resulting from the recent shock of the pandemic.”
Here’s Anneliese Dodds MP, Labour’s Shadow Chancellor, on the record jump in redundancies that pushed Britain’s unemployment total up:
“Today’s redundancy data is deeply concerning. Sadly, more people are going to lose their jobs until the Government gets a grip. That means fixing test, trace and isolate, putting in place a proper Job Recovery Scheme and making clear, consistent and fair funding available to local areas as soon as restrictions are applied.
“The Chancellor’s chaotic habit of trying to fix problems of his own making at the last possible minute risks unemployment spiralling to levels we haven’t seen in decades.”
Full story: UK redundancies rise at record rate amid Covid fallout
Here’s our economics correspondent Richard Partington on this morning’s UK jobless report:
The number of redundancies in the UK has risen at the fastest rate since records began as the economic fallout from Covid-19 and scaling-back of the government’s furlough scheme drives up unemployment.
The Office for National Statistics said 227,000 redundancies were made in the three months to August, an increase of 114,000 from the level in June and the fastest rise on record.
Against a backdrop of rising concern over job losses as the government scaled back the furlough scheme, the headline unemployment rate increased to 4.5% in the three months to August – representing 1.5 million people out of work – up from 4.1% in July.
Here’s the full story:
ING economist James Smith believes the UK jobless rate could hit 10% this winter – which would be the highest since the 1993 recession.
He told clients:
“With new Covid-19 restrictions across the UK, there can be little doubt that challenges facing the jobs market are mounting. The latest labour market figures continue to show further signs of strain. While the unemployment rate remained pretty low at 4.5% for the three months to August, there are clear questions (as highlighted by the ONS this month) as to how useful this metric is at the moment.
Instead, we need to look at the more real-time data from payrolls, which shows that there were still roughly 670,000 fewer employees than before lockdown in March. Unfortunately, things are unlikely to improve in the near-term, and the combined impact of renewed business closures and the end of the original furlough scheme is likely to push the unemployment rate considerably higher into year-end.”
“Putting all of this together, we think we are likely to see the unemployment rate rise towards 9-10% over the winter. This will put additional pressure on the Bank of England to add stimulus, and we expect another round of QE at the November meeting.”
The new three-tier system, with tougher restrictions for locations with high Covid-19 infection rates, threatens to push unemployment higher too.
Sasha Lord, night time economy adviser for Greater Manchester, told Sky News a few minutes ago that the hospitality sector will “undoubtedly see mass closures and mass redundancies.”
Lord points out that the new UK wage subsidy scheme for part-time workers (replacing the furlough scheme), is less generous than other countries because employees still have to pay a third of unworked hours.
“Many, many operators are on their knees.”
Lord also warns that the mental health of operators and employees has been badly hit by months of disruption and uncertainty. Some firms are “broken” and “shattered”, and will end up handing the keys of their premises back.
This tweet from the TUC shows how the UK jobless rate has pushed higher, while the employment total is dropping.
Kalum Pickering of Berenberg Bank predicts that the UK’s unemployment rate will soar once Rishi Sunak’s furlough scheme ends this month.
He estimates it could hit 8% – or double its level before the pandemic:
Unlike in the US, furloughed workers in the UK who receive support via the government’s CJRS (Coronavirus Jobs Retention Scheme) are classed as employed. This distorts the underlying picture. Once the CJRS expires on 31 October, we expect a wave of layoffs across the UK to push the unemployment rate temporarily above 8.0% during Q4 2020, falling thereafter in line with the economic rebound.
While recent policy initiatives such as the Job Support Scheme and the local furlough schemes to support workers in businesses that are forced to close due to regional restrictions will continue to support employment, they are unlikely to fully offset the forthcoming jump in layoffs once the CJRS ends.
Tony Wilson, director of the Institute for Employment Studies, predicts that more people will be made redundant during the Covid-19 pandemic than in the 2009 recession after the financial crisis.
Redundancies are growing at their fastest ever rate, doubling in the last three months alone. This morning’s figures confirm that redundancies will peak higher in this recession than they did in the last crisis, and we’re still forecasting that there’ll be at least six hundred thousand lay-offs by the end of year.
So unfortunately the worst may well still be ahead of us. Revisions to earlier estimates also show that the official measure of employment has fallen by nearly half a million since the pandemic began, which is the fastest fall in employment since 2009. This is now starting to feed through into higher unemployment, which again is going to continue to rise through the autumn.
There are some signs of improvement however in today’s data, with the most recent flash estimate for payroll employees showing that employment started to level off through September. While this is positive, with the coronavirus infections now rising strongly again it feels unlikely that we’ll start to see much growth in employment and hiring in the coming months.
TUC: UK on precipice of an unemployment crisis
TUC general secretary Frances O’Grady is urging Rishi Sunak to bolster his wage subsidy schemes:
“We are on the precipice of an unemployment crisis. Ministers must act now to protect and create jobs. The expansion of the job support scheme is a step in the right direction, but it still falls short.
“Wage replacement should be 80% for businesses who have to shut. We need a more generous short-time working scheme for firms which aren’t required to close but will be hit by stricter local restrictions. And self-employed people in local lockdown areas need help too.
“Ministers must do more to create good new jobs. TUC research shows that we could create 1.2 million new jobs in the next two years in green transport and infrastructure, and another 600,000 by unlocking public sector vacancies.”
Sunak: We can’t save every job
Chancellor of the Exchequer, Rishi Sunak, has suggested that people who lose their jobs during the pandemic should consider retraining, or apprenticeships.
Responding to today’s jobless figures, Sunak says:
I’ve been honest with people from the start that we would unfortunately not be able to save every job. But these aren’t just statistics, they are people’s lives. That’s why trying to protect as many jobs as possible and to helping those who lose their job back into employment, is my absolute priority.
“This is why we put together an unprecedented £190bn package of support and have a comprehensive Plan for Jobs. Our measures have focused on protecting people’s livelihoods, which is what the furlough scheme has done and what our support schemes – including SEISS, the Job Support Scheme and Job Retention Bonus – continue to do.
“For those who do lose their job, there will be new opportunities through apprenticeships, traineeships and our £2bn Kickstart scheme, and extra work search support which will help to ensure nobody is left without hope.”
Record decrease in 18-24 year olds in work
Alarmingly, there was a record slump in the number of younger people in work over the summer.
That’s a clear, worrying sign that Covid-19 is hurting people early in their careers, or making it much harder to get into the jobs market at all.
The number of older workers also fell — while other groups fared better as the economy emerged from the spring lockdown.
The ONS explains that, in June-August….
Those aged 16 to 24 years decreased by 220,000 to a record low of 3.54 million (with a record decrease of 191,000 for those aged 18 to 24 years), while those aged 65 years and over decreased by 24,000 to 1.28 million.
In contrast, there was a combined increase of 92,000 on the quarter for those aged 25 to 64 years, to 27.77 million (with women in the 25 to 34 years age group at a record high of 3.61 million).
The Office of National Statistics also estimates that the slump in UK payrolls may have stopped last month, after heavy falls earlier in the pandemic.
Early estimates for September 2020 suggest that there is little change in the number of payroll employees in the UK; up 20,000 compared with August 2020.
Since March 2020, the number of payroll employees has fallen by 673,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic.
But… struggling companies could still furlough workers in September, and get the government to cover some of their wages….
The number of people made redundant from their job in the UK jumped at a record rate over the summer, driving the unemployment rate up.
The ONS says:
Redundancies increased by 113,000 on the year, and a record 114,000 on the quarter, to 227,000.
The annual increase was the largest since April to June 2009, with the number of redundancies reaching its highest level since May to July 2009.
Employment total falls
Today’s labour force report is a grim read.
On employment, it shows that the number of people in work fell by over 150,000 in the last quarter, to below 32.6 million. This pulled the employment rate down from 75.9% to 75.6%.
The ONS says younger workers, part-time staff and self-employed people were worst hit.
Estimates for June to August 2020 show 32.59 million people aged 16 years and over in employment, 102,000 fewer than a year earlier. This annual decrease was driven by men in employment (down by 213,000 on the year to 17.04 million).
Employment decreased by 153,000 on the quarter; men in employment decreased by 115,000, while women in employment decreased by 38,000. This quarterly decrease was driven by people in employment aged 16 to 24 years, the self-employed and part-time workers, but was partly offset by increases in employment for people aged 25 to 64 years and full-time employees.
Introduction: UK jobless rate jumps to 4.5%
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Unemployment in the UK is rising at the fastest pace since the aftermath of the financial crisis, as the Covid-19 pandemic continues to hurt the economy, costing more people their jobs.
The latest labour force statistics, just released, show that Britain’s unemployment rate jumped to 4.5% in the June-August period.
That’s a sharp jump on the 4.1% recorded a month ago, and looks to be the highest level since spring 2017.
According to the Office for National Statistics, there were an estimated 1.52 million people unemployed in the June-August quarter. That’s an increase of 209,000 on the year and up 138,000 on the quarter.
The ONS explains:
The annual increase was the largest since September to November 2011 and the quarterly increase was the largest since May to July 2009.
- the estimated UK unemployment rate for men was 4.9%; this is 0.8 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter
- the estimated UK unemployment rate for women was 4.0%; this is 0.3 percentage points higher than a year earlier and 0.1 percentage points higher than the previous quarter
This increase shows that after months of lockdown restrictions, some firms were forced to let staff go over the summer – or collapsed altogether.
Worryingly, this comes before the government winds up the furlough scheme. August, you may remember, was the Eat Out To Help Out month, when the government subsidised meals in pubs, restaurants and cafes to prop up the economy….
The ONS also reports that the Claimant Count, which measures the number of people receiving jobless support, has surged by 120.3% since March 2020.
The employment rate has fallen, down 0.3 percentage points on the quarter, to 75.6%.
And redundancies increased by a record 114,000 on the quarter – with 227,000 people being laid off, up from 113,000 in March-May.
More details and reaction to follow….
Also coming up today
The International Monetary Fund publishes its new economic forecasts, as its Annual Meeting gets underway. They’re likely to show a small improvement, but still leave 2020 as the worst year in decades.
The ZEW institute releases its latest economic confidence data for German, and the wider eurozone.
- 7am BST: US labour market statistics
- 10am BST: ZEW index of eurozone economic sentiment
- 1.30pm BST: IMF publishes its latest World Economic Outlook