UK unemployment rate continues its increase in Q3

UK unemployment rate continues its increase in Q3
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The UK unemployment rate surged again in the third quarter, as the impact of the coronavirus pandemic continued to affect the country’s jobs market.

Data from the Office for National Statistics (ONS) showed that the unemployment rate in the UK went up from 4.5% to 4.8% in the three months to September. During the same period, the ONS noted that redundancies went up to a record high of 314,000.

Furlough scheme and redundancies

The redundancies were a result of companies gearing up for the end of the furlough scheme, which was originally scheduled to stop at the end of October but has now been extended until the end of March next year.

According to analysts, the extension came “too late in the day” to save some jobs and they expect further surges in unemployment in the next months.

In September, Chancellor Rishi Sunak introduced a new emergency jobs strategy that will replace the current furlough scheme, the Coronavirus Job Retention Scheme.

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According to Chancellor Sunak, the new emergency jobs scheme, dubbed the Jobs Support Scheme, will enable workers to receive three quarters of their normal salaries for six months.

It is aimed at preventing mass job cuts following the UK government’s introduction of new measures to address the increase in coronavirus cases. Sunak said it was part of a wider “winter economy plan”.

However, the British think tank Resolution Foundation warned that the new jobs support scheme will only be able to slow down job losses but won’t be able to halt a major surge in unemployment in the UK.

The think tank pointed out that firms would have “little or no incentive” to use the new scheme because they had to pay employees for hours not worked. It said that the plan “will not significantly reduce the rise in unemployment.”

The Foundation also mentioned that approximately six million of the UK’s poorest households could face a reduction in income of up to £20 a week when the government’s temporary support to basic benefits ends in April 2021.

A freedom of information request in October also revealed that UK redundancies have reached almost 500,000 for the first five months of the coronavirus pandemic.

The figures showed that UK companies planned 58,000 redundancies in August, bringing the total to 498,000 since the coronavirus pandemic began. Around 966 UK employers have notified the government of plans for job cuts of 20 or more, compared to 214 in August 2019.

However, the number of redundancies actually fell during the month compared to levels observed in June and July, when 150,000 job cuts were reported during both months.

Latest ONS unemployment figures

During the three-month period, the number of unemployed people rose by 243,000, the highest increase recorded since May 2009.

However, the redundancies reached a record high of 314,000 because it included those who may have lost their jobs and then retired or decided to stop looking for work.

The ONS data also revealed that unemployment among 16 to 24-year-olds has also surged dramatically and that the unemployment rate among young people is significantly higher than the overall rate.

ONS deputy national statistician for economic statistics Jonathan Athow said: “We’re seeing a continuation of a weakening of the labor market, fewer people on the payrolls and fewer people employed overall. That is now passing through to increasing unemployment altogether.”

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