Unemployment in Britain has jumped to its highest level for more than three years amid fears that millions more people will be on the dole queue by Christmas.
The number of jobless people rose by 138,000 quarter on quarter to 1.52million in the three months to August – the highest since 2017. The unemployment rate rose to 4.5 per cent, from 4.1 per cent in the prior three months.
The Office for National Statistics added that the number of UK workers on company payrolls fell by 673,000 between March and September, despite edging up by 20,000 last month.
The data also showed redundancies jumped by a record 114,000 on the quarter to 227,000, their highest level since 2009 when Britain was in the grip of the global financial crisis.
The FTSE 100 index of Britain’s leading companies was down 0.6 per cent or 35 points to 5,967 today following the news, which added to concerns about the economic impact of new coronavirus-led business restrictions.
These Office for National Statistics graphs show how the unemployment rate is rising and the employment rate falling
Redundancies increased by a record 114,000 on the quarter – shown between June to August 2005 and June to August 2020
This graph shows how the number of UK employees has fallen in recent months, having risen for several years before then
The total number of hours worked is still low since the coronavirus crisis took hold, but it is now showing signs of recovery
ONS deputy national statistician Jonathan Athow said: ‘Since the start of the pandemic there has been a sharp increase in those out of work and job-hunting but more people telling us they are not actively looking for work.
‘There has also been a stark rise in the number of people who have recently been made redundant.’
Experts warned that unemployment will continue to ramp up as the Government’s furlough programme comes to an end, with firms having to start making a 10 per cent contribution to the costs of staff on the scheme last month.
The scheme will come to an end on October 31. But there was a small dose of cheer as the data showed a sign of recovery in vacancies, which surged by a record 144,000 to 488,000 between July and September.
The growth in employee total pay including bonuses is unchanged from a year earlier, translating to a real fall of 0.8 per cent
The level of vacancies saw a record quarterly rise in July to September 2020, but it is still 40.5 per cent lower than a year ago
The Office for National Statistics reported that the claimant count level in Britain has risen by 120 per cent since March 2020
This graphic shows the impact of the main dates during the coronavirus pandemic on labour market data sources
Despite this, vacancies still remain below pre-coronavirus levels and 40.5 per cent lower than a year earlier.
Analysis: Unemployment rises, but the worst is yet to come
By SUSANNAH STREETER
The UK jobs market is already more precarious than forecast with unemployment rising by 4.5 per cent in the three months to August, pushing up the total to 1.52 million, the highest level for more than three years.
The worst is yet to come however, given that the mass furlough scheme won’t be ending for another few weeks.
With the general subsidy removed, many thousands more people are expected to be ejected from their jobs into what will be a difficult search for work.
Although employers can still access support from the government under the new scheme, they have to afford to pay staff part-time wages and that won’t be easy as consumer demand in many sectors remains depressed.
The arts, entertainment and recreation sector is expected to be particularly badly hit, with 51 per cent of workers on furlough with so many venues still closed.
The prospects for employment in the hospitality sector are also gloomy given the indications that bookings may be slowing.
Although there was a sharp increase in business over the summer for the restaurants, bars and hotels, due to the Eat Out to Help Out scheme and ‘staycations’, fresh restrictions on trade such as the 10pm curfew and new local lockdowns, are leading to a decline in trade.
Research from the ONS shows that, over the last couple of weeks, people have been less likely to leave home to socialise and there has been a reduction in the percentage of adults eating or drinking at a restaurant, café, bar or pub.
Susannah Streeter is a senior investment and markets analyst at Hargreaves Lansdown
The ONS also said regular pay, excluding bonuses, grew by 0.8 per cent in the three months to August, although average total pay, including bonuses, was unchanged.
Chancellor Rishi Sunak insisted the Government’s Plan for Jobs would help protect employment and ‘ensure nobody is left without hope’.
‘I’ve been honest with people from the start that we would unfortunately not be able to save every job,’ he said. ‘But these aren’t just statistics, they are people’s lives.
‘That’s why trying to protect as many jobs as possible and helping those who lose their job back into employment is my absolute priority.’
But businesses and economists said they are braced for mounting job losses, in spite of the Chancellor’s follow-up worker support schemes.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: ‘The Job Support Scheme will do little to hold back the tide of redundancies.
‘We continue to expect the headline rate of unemployment to shoot up over the coming months.’
Tej Parikh, chief economist at the Institute of Directors, said: ‘With the furlough scheme unwinding, cash-strapped firms have been forced into difficult decisions about retaining their staff.
‘Demand remains weak and as restrictions ramp up again many businesses will be stretched when it comes to paying wage bills.
‘The Job Support Scheme may need to be beefed up if the Government wants to avert further rises in unemployment.’
Prime Minister Boris Johnson introduced a new system of restrictions for England yesterday and a minister said government may have to go further.
The Confederation of British Industry said ramping up the government’s testing regime will be a key component to securing an economic recovery.
The Bank of England has forecast that the unemployment rate will hit 7.5 per cent by the end of the year. But BoE Governor Andrew Bailey yesterday repeated his warning that the economy could prove weaker than the central bank’s forecasts.
Britain’s economy grew in August at its slowest pace since May as its bounce-back from the lockdown slowed.
Tom Pickersgill, chief executive of Orka, which provides a platform for shift workers, said: ‘Almost a million people have lost their jobs since the start of the pandemic and, given the latest lockdown measures, this number could climb again in the coming months.
‘While this is a terrible situation for so many to be in, the picture of the job market isn’t completely black and white and there are some opportunities out there.
‘Permanent 9-5-style roles are going to take time to recover to pre-Covid levels, but we’re also going to see a spike in temporary job opportunities as businesses favour flexibility in their approach to hiring.’
Chancellor Rishi Sunak during a press conference at 10 Downing Street in Westminster yesterday evening
Scores of companies in Britain have announced plans to cut jobs since the pandemic struck. Last week the owner of clothing retailers Edinburgh Woollen Mills, Peacock’s and Jaeger put 24,000 jobs at risk by saying it was set for administration.
Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, said: ‘With redundancies increasing sharply even before the national furlough scheme is fully unwound, today’s figures are a stark reminder that this crisis still has a long way to run.
‘This is not the time for half measures: the government can still act quickly and decisively to prevent a wave of unemployment that will hit the poorest hardest.
‘And those who have already lost their jobs should be able to rely on a properly funded benefits system and given the opportunity to gain the skills they need to get back into work.’