UK redundancies rise to record high amid second Covid-19 wave

The number of people being made redundant in the UK soared to a record high in October amid the second coronavirus wave and as the government scaled back its furlough scheme before an 11th hour extension.

Richard Partington www.theguardian.com 

The Office for National Statistics said redundancies rose to 370,000 in the three months to October, the most since records began in 1992. Fuelled by job losses in retail and hospitality, the figures reflect a period when furlough was being made less generous before its intended closure at the end of the month.

However, the government staged a last-minute U-turn to extend the scheme until the end of March 2021, as rapid growth in coronavirus infections led Boris Johnson to impose a second national lockdown in England from November and as tougher controls were put in place in Scotland, Wales and Northern Ireland.

The ONS said the 217,000 quarterly increase in redundancies in October was unprecedented and pushed up the headline UK unemployment rate to 4.9%, up slightly from 4.8% in the three months to September. The rate was 3.8% at the end of 2019.

Analysts said the relatively small rise in the unemployment rate was down to the way the ONS compiles figures for a three month period. More than 200,000 people were also away from work and not being paid due to the pandemic, but were still officially counted as employed. The ONS said for the single month of October, the unemployment rate had jumped to 5.2%.

The devastating impact of the pandemic on the jobs market was underlined by HMRC figures showing there were 820,000 fewer employees on company payrolls in November than in February, before the pandemic struck. More than a third of that reduction has come from the hospitality sector.

However, while the number of people being made redundant hit a fresh record, the ONS said there were signs the pace of job cutting eased towards the end of October. According to a survey of company bosses by the statistics agency, 7% of businesses surveyed between 19 October and 1 November planned to make redundancies within the next three months, compared with 9% in a survey between 5 and 18 October.

Business leaders said the reintroduction of tighter restrictions and the expected cliff edge from the furlough scheme drove up redundancies. Suren Thiru, the head of economics at the British Chambers of Commerce, said extending the wage subsidy scheme would help to protect jobs over the winter months, but that a messy Brexit would further drive up unemployment.

“Failure to achieve a UK-EU trade deal risks adding to the longer-term structural unemployment caused by the pandemic by limiting the competitiveness and viability of some industries,” he said.

The latest unemployment figures are likely to pile renewed pressure on the chancellor, Rishi Sunak, to provide additional financial support for businesses and workers as coronavirus infections continue to climb in some parts of the country, leading to continued government restrictions. Sunak is expected to review the furlough scheme in January.

Anneliese Dodds, the shadow chancellor, said it was no coincidence that redundancies soared in October when companies believed the furlough programme was due to end. “The chancellor’s irresponsible decisions haven’t just cost jobs – they’ve left us in the worst recession of any major economy. It was his decision to wind down the furlough scheme before we were out of this crisis, and his decision to wait until the last possible minute to change course,” she said.

Frances O’Grady, the general secretary of the TUC, said the government needed to boost the value of universal credit benefits and invest more money in creating new jobs. “We are staring down the barrel of mass unemployment. There’s no time left to waste,” she said.

The ONS said hiring trends had remained flat in recent months. There were 547,000 vacancies in the three months to November – 110,000 more than the previous quarter but still 31.5% below the number of job openings available a year ago.

The government’s independent economic forecaster, the Office for Budget Responsibility, estimates that unemployment could increase from the current rate of 4.9% to as high as 7.5% by the middle of next year after the furlough scheme ends – representing 2.6 million people unemployed. The jobless rate had been as low as 4% this year before the Covid pandemic struck.

Mims Davies, the employment minister, said the government was helping people to find new jobs and hinted there was “more to come” to cushion the economic fallout from the pandemic.

“It’s been a truly challenging year for many families but with a vaccine beginning to roll out with more perhaps to follow and the number of job vacancies increasing there is hope on the horizon for 2021,” Davies said.

“Our plan for jobs is already helping people of all ages into work right across the UK, with increased jobcentre support, new retraining schemes, new job placements like Kickstart for our young people and more to come as we are determined to build back better.”

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