US economy

UK job losses rise at record rate in three months to August

UK job losses rose at a record rate in the three months to August, even as more furloughed employees returned to work and some companies began hiring, official data showed on Tuesday.

The Office for National Statistics said the number of redundancies increased by 114,000 on the quarter, the biggest jump since such statistics were first published in 1995, while the number of people claiming out-of-work benefits rose to 2.7m — more than double the level in March, before the coronavirus lockdown.

The unemployment rate rose to 4.5 per cent, up from 4.1 per cent in the previous quarter and 3.9 per cent a year earlier, while the employment rate was 0.3 percentage points lower on both the year and the quarter, at 75.6 per cent.

But alongside rising job losses there is also evidence of other people returning to work during the upswing in economic activity seen over the summer. The ONS recorded a sharp quarterly increase in the number of vacancies, driven by small businesses.

It estimated that the number of people temporarily away from work — including furloughed employees — fell from 7.3m in the April-to-June period to 6.4m people in June to August.

Real-time data collected by HM Revenue & Customs — which the ONS view as the best guide to employment at present — show that the number of employees on companies’ payrolls rose by 0.1 per cent, or 20,000 people, between August and September. It is now 629,000 lower than a year earlier, but most of this drop occurred in the early months of the pandemic.

“These aren’t just statistics, these are people’s lives,” Rishi Sunak, chancellor, said in a response to the figures, adding that his “absolute priority” was to protect as many jobs as possible and help those who lost jobs back into employment. 

However, economists said job losses were bound to climb as new Covid-19 restrictions came into effect while the government’s support for workers became less generous. 

“The latest batch of data show that the labour market has been somewhat weaker than previously thought and that the fallout from the Covid-19 recession is intensifying,” said Paul Dales, at the consultancy Capital Economics. He added that with new restrictions on the hospitality and entertainment industries likely to lead to the recovery stalling or going into reverse, “worse lies ahead”. 

These figures paint a slightly bleaker picture of the labour market than the ONS’s previous estimates: the agency has revised its figures after discovering that its statistics had been skewed by changes to the way it conducts its research, brought in hurriedly as a result of the March lockdown.

Whereas previously it knocked on doors and conducted the initial stage of its labour force survey largely through face-to-face interviews, it has since March switched entirely to phone interviews. This led to a shift in the type of households answering the survey — with a higher proportion of owner occupiers and fewer renters.

The ONS said on Monday it had now reweighted its estimates and was confident that its headline measures now gave a better picture of the true state of the labour market — but because of the time taken to rework the figures, it had not been able to calculate all the details it would usually provide.


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