Pandemic sees biggest rise in unemployment for over a decade

Holly Williams, PA Deputy City Editor
·3-min read

Soaring job losses amid the pandemic have sparked the biggest rise in unemployment for more than a decade and experts have warned over more pain to come as coronavirus restrictions ramp up.

The Office for National Statistics (ONS) revealed a 138,000 surge in unemployment between June and August – the largest increase since summer 2009.

This took the jobless total to a three-year high of 1.52 million, while the rate of unemployment jumped to 4.5%, from 4.1% in the previous three months.

It came as redundancies rose by a record 114,000 quarter-on-quarter to 227,000 as the coronavirus crisis claimed jobs across the economy.

ECONOMY Unemployment
(PA Graphics)

There was a chink of light as real-time payroll data showed a 20,000 increase in the number of UK workers on company payrolls last month – the first since the lockdown in March.

There was also a recovery in job vacancies, which leaped by a record 144,000 to 488,000 between July and September.

But vacancies remain below pre-coronavirus levels and 40.5% lower than a year earlier, while the data showed the number of UK workers on company payrolls plunged by 673,000 between March and September.

Warnings of a looming unemployment crisis are mounting as the worker furlough scheme ends later this month, coinciding with new restrictions across parts of the UK.

Chancellor Rishi Sunak insisted the Government’s Plan for Jobs would help protect employment and “ensure nobody is left without hope”.

Last week he unveiled new job support for businesses forced to close under new coronavirus restrictions, which will see the Government pay two-thirds of each employee’s salary – up to a maximum of £2,100 a month.

Pay growth v inflation
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Experts cautioned his measures may not be enough to prevent mass unemployment.

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.”

The latest data showed overall employment is down by 482,000 since the start of the year, with young people hit hardest as 16 to 24-year-olds account for 60% of the fall.

UK payroll employees
(PA Graphics)

The latest data showed claims under Universal Credit by the unemployed and those on low incomes rose by 1% in September to 2.7 million and a 1.5 million increase since March.

The ONS also said regular pay, excluding bonuses, grew by 0.8% in the three months to August, with average total pay, including bonuses, unchanged as more workers returned from furlough.

But with almost three million workers still on furlough, the Resolution Foundation think tank said further job losses were “inevitable”.

It urged the Government to consider reducing employer contributions in the Job Support Scheme “so that it supports firms to cut hours rather than jobs”.