UK unemployment rate jumps to highest for five years
The UK unemployment rate rose to 5.0 per cent of the economically active population in the last quarter, spurred on by a record rise in redundancies.
For September to November 2020, an estimated 1.72m people were unemployed, according to new figures from the Office of National Statistics.
That’s up 418,000 on the same period the previous year and up 202,000 on the quarter.
Unemployment reached its highest level since July to September 2015, the ONS said.
“This crisis has gone on far longer than any of us hoped – and every job lost as a result is a tragedy,” said Chancellor Rishi Sunak.
The new rate of unemployment is now 1.2 per cent higher than it was at the same time last year.
This surge was driven by the redundancy rate, which reached a record high of 14.2 per thousand in the same period.
But economists said that the government’s business support measures, such as the furlough scheme, were keeping a lid on the full extent of the damage to the job market.
The unemployment rate measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks.
There was also a slowdown in the number of job vacancies available over the last quarter.
According to the ONS, an estimated quarterly increase of 81,000 means there are now 578,000 vacancies, but that increase is half what it was in July to September 2020.
Extend furlough scheme, say economists
Economists said that it was likely that the unemployment rate would rise when the government ended its support schemes.
Equals Group chief economist Jeremy Thomson-Cook said that people in the retail, hospitality and construction sectors would be especially exposed.
He added: “The current expiry of the furlough scheme at the end of April looks premature and we would both urge and expect the Chancellor to allow for a gradual cessation of support through the summer.”
Tej Parikh, chief economist at the Institute of Directors, agreed that it was “crucial” that the furlough scheme be extended.
“The latest lockdown will have only added further pressure on firms with troubled balance sheets, which means more jobs are likely to be lost in the coming months”, he said.
The chairman of recruitment firm Reed, James Reed, said the figures supported Sunak’s statement in November that the economic emergency had “only just begun”.
Despite this, he said he was optimistic for the future. “With the vaccination programme gathering pace, the economy will begin to reopen and a return to normality could be sooner than expected”, he said.
“Jobseekers are urged to get ready for an easing in lockdown restrictions, and those currently unemployed or furloughed can do so by upskilling or reskilling for the emerging post-pandemic and post-Brexit economy.”