Unemployment rate in the UK hits highest level in more than three years
According to research released today by the Office for National Statistics (ONS), the UK unemployment rate has risen to its highest level in more than three years.
The COVID-19 pandemic has been blamed for the statistics. The unemployment rate has soared since the crisis began.
In total, the unemployment rate in the UK grew to 4.5% in the three months to August 31, compared with 4.1% in the previous quarter. According to ONS 1.5 million people were unemployed between June and August 2020.
The quarter also saw the highest rate of redundancies since the 2008 financial crisis. The total during this time period rose to 227,000.
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.
Data from our Labour Force Survey show the employment rate has been decreasing since the start of the coronavirus pandemic, while the unemployment rate and the level of redundancies have been increasing in recent periods. Total hours worked, while still low, show signs of recovering and there are fewer people temporarily away from work.
Vacancies also show signs of a recovery, with a record quarterly increase in the recent period. Annual growth in employee pay strengthened in August 2020 as employees continued to return to work from furlough; this followed strong falls in months since April when growth was affected by lower pay for furloughed employees, and reduced bonuses.
We must support people to thrive in the new normal
Andrew Harding, Chief Executive, The Chartered Institute of Management Accountants, part of the Association of International Certified Professional Accountants, said: “This morning’s news that UK job losses rose at the fastest rate since records began, coupled with the biggest rise in unemployment in over a decade, show the devastating effects the pandemic has had on jobs and businesses. With further restrictions likely to be imposed over the winter months, we must brace ourselves for further disruption.
“Back in April, a survey suggested that a fifth of firms did not have enough cash to survive even the next four weeks. Our own research certainly confirmed that firms’ top lines have taken a knock during the pandemic with revenue for SMEs down 6.6% on average over the last six months. Many continue to anticipate challenges with a third of SMEs expecting to make some employees redundant in the next three months.
“Yet there is cause for optimism. SMEs have also been prompt to adapt and quickly tailored their business and operating models to the new, rapidly changing business environment with 37% of businesses asking their employees to take on new responsibilities and expand their skillset. In the face of the biggest economic hurdle in decades, having the right skills isn’t just “a nice to have” for businesses – it is essential for survival.
“If we are to get the economy back on its feet, remain competitive on the global scene and sustain growth, we need to better support all workers to reskill and upskill throughout their careers and encourage them to now start adapting their skillsets to the post-pandemic ways of working. This includes changing the Apprenticeship Levy to an Apprenticeship and Skills Levy for all workers to ensure businesses have the talent they need now and in the future; continuing to invest towards higher level apprenticeships to raise the skill levels of the UK workforce; and introducing a rebuttable right to retrain to empower workers to request further training and development.”
Dr Joe Marshall, Chief Executive of National Centre for Universities and Business said: “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.
“Time is running out and the Government must act now to save a generation of talent and safeguard our future prosperity. We need decisive action from the Government to help young people into employment and help employers to retain talent and valuable entry level jobs. It’s imperative employees and employers alike. We are calling on the Government to temporarily abolish National Insurance Contributions for young people under the age of 25, meaning the cost of hiring is lower. Without support, young people will face unemployment or lower wages, and employers will lose out on the innovative, talented workforce they need to recover. These new figures today truly hammer home the scale of the crisis we face and demonstrate the need to fundamentally evaluate our future labour needs and develop suitable policies in response. We urge the Government to take this seriously.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown: “The UK jobs market is already more precarious than forecast with unemployment rising by 4.5% 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% 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.”
James Reed, Chairman of REED, said: “Today’s ONS figures, combined with the introduction of further local lockdowns, suggest that the Bank of England’s forecasted unemployment rate of 7.5% by 31st October is still a real possibility as we edge towards the end of the furlough scheme
“The Government has recognised and sought to address this looming job crisis, with the launch of the Jobs Support Scheme (JSS) to promote part-time employment and the Job Entry Targeted Support Scheme (JETS) being the most recent examples. The JSS’s offer to pay 67% of workers’ wages at firms shut due to COVID-19, is a vital line of support to businesses as the UK grapples with the new three-tiered lockdown system and a winter of stop-start regional lockdowns. But the scheme will need to be improved before its launch in November if is to provide more flexibility and be more generous to those most in need.
“The £238m JETS scheme will help jobseekers who’ve been out of work for at three months or more, with CV assistance, interview coaching, and, importantly, advice on how to reskill into growing sectors. Reskilling will be vital to the UK’s economic recovery from COVID-19, because, despite the doom and gloom in the news, new job opportunities are starting to emerge. Over 160,000 new jobs were added onto reed.co.uk last month – a 28% month-on-month increase – with roles significantly increasing in the accountancy, education, and health and medicine sectors. Reskilling will open the door to opportunities for jobseekers in growing sectors and prevent a more widespread unemployment crisis from gripping the country.
“At the start of the pandemic, I predicted that a tsunami of job losses was heading our way but, with a renewed focus on reskilling and redeploying workers to thriving sectors, this wave of unemployment will subside soon.”