The number of redundancies in the UK rose to a record high in October amid the second Covid wave, and as the government scaled back its furlough scheme before the decision was made to extend it.
Data from the Office for National Statistics (ONS) found redundancies soared to 370,000 in the three months to October, fuelled mainly by job losses in the retail and hospitality sectors – an increase of a record 217,000 redundancies when compared to the previous quarter.
The ONS said the number of employees on payroll had fallen by 819,000 since February 2020, when the pandemic first hit the UK.
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Early estimates for November 2020 – after the decision was made to extend the furlough scheme to March 2021 – suggested there was another “slight drop over the month” in the number of employees in the UK.
As a result, this pushed up the unemployment rate to 4.9 per cent, up slightly from 4.8 per cent in the three months to September.
Speaking to the BBC’s Today programme, Darren Morgan, ONS’s director of economic statistics, said the hospitality sector had “really struggled during the pandemic”.
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"If you look at the number of people losing their jobs, the number of people on furlough and the vacancies available for people looking for jobs in the hospitality sector, all that adds up to a very difficult time for that industry,” Morgan said.
But employment minister Mims Davies 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, adding that the government’s plan for jobs was already helping people back into work.
The ONS data found the North East had the highest unemployment rate at an estimated 6.6 per cent for the period August to October 2020. This was followed by London with an estimated 6.3 per cent unemployment rate, and the West Midlands’ unemployment rate sat at 5.4 per cent.
The UK regions with the lowest estimated unemployment rate were the South East and Northern Ireland, both at 3.9 per cent.
The only decrease in the unemployment rate estimate compared with the previous quarter was in Scotland at 0.6 percentage points.
Gerwyn Davies, senior labour market adviser at the CIPD, said the worry for employers, and the UK more broadly, was the record increase in redundancies would “add fuel” to the rising jobless count in the coming months. “Pain is still being inflicted on significant parts of the workforce, especially young male jobseekers and the self-employed,” he said.
Davies said the government needed to consider extending the furlough scheme to the end of June to “keep a lid on unemployment”, describing the support as critical for sectors that continue to be subjected to public health restrictions. He added: “The government should significantly raise public skills investment to help upskill or retrain staff in sectors hardest hit by the pandemic and for those who have been made redundant during this period.”
Though the number of redundancies rapidly increased, the ONS data also found the number of actual weekly hours – a measurement of the time employees spent actively working – increased between August and October. The total actual weekly hours in the UK saw a record 12.3 per cent increase to 960 million hours worked between May to July and August to October.
This was likely down to the scaling back of the government’s furlough scheme and more employers welcoming back staff coming off the scheme.
Neil Carberry, chief executive of the Recruitment & Employment Confederation (REC), said 2020 had been a tough year, but there were reasons to be hopeful approaching 2021. The REC’s own jobs recovery tracker measured 1.4 million active job postings at the start of December, representing “a new high for the year”.
But even with more jobs being advertised and hours being worked, Carberry said this was “not yet enough to offset record redundancies”. He called on the government to “secure a deal” in the final few days before the Brexit transition period ends, warning that otherwise businesses faced barriers to trade and disruption “just as they are starting to recover from the pandemic”.