finance

UK job losses slow as furlough scheme helps limit unemployment rise


UK job losses slowed in November despite the national lockdown, according to official data that suggest the extension of the furlough scheme limited the rise in unemployment.

The rate rose to 5 per cent in the three months to November, the Office for National Statistics said on Tuesday, 0.6 percentage points higher than in the previous quarter and 1.2 percentage points higher than a year earlier. This means some 418,000 people have fallen out of work since the start of the coronavirus pandemic, taking the total number of people in unemployment to 1.72m.

However, weekly data suggest that most of the quarterly increase in unemployment came in September and October — when employers thought the furlough scheme was due to end — with the rate remaining fairly flat in November after chancellor Rishi Sunak’s last-minute decision to extend it.

“This crisis has gone on far longer than any of us hoped — and every job lost is a tragedy,” the chancellor said in response to the figures. “We’re throwing everything we’ve got at supporting businesses, individuals and families.”

The claimant count — a different measure of unemployment that includes people who are working on low pay and claiming benefits — increased slightly in December to 2.6m.

The redundancy rate had also dropped from a peak in September by the end of November, the ONS said, although the quarterly rate of 14.2 per thousand was a record high.

Surveys conducted by the ONS suggest that up to 16 per cent of the workforce was on furlough in late November, although the number of people reporting that they were temporarily away from work was much lower than during the April lockdown, at 4.1m.

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Despite the reintroduction of lockdown measures in November, total hours worked over the three-month period were higher than in the previous quarter, the ONS said.

However, the recovery in hiring had slowed by December, with the level of vacancies still 224,000 lower than a year earlier.

Earnings growth was also weak: the ONS said that the headline rate of total pay growth, which showed a year-on-year rise of 3.6 per cent, was driven by a fall in the number and proportion of low-paid jobs and that, after adjusting for this effect, it was likely to be under 2 per cent.

Tej Parikh, chief economist at the Institute for Directors, said it was now “crucial” for the furlough and other Covid-19 economic schemes to be extended beyond the spring to support jobs.

Samuel Tombs, at the consultancy Pantheon Macroeconomics, said the data showed a “day of reckoning postponed”.

Any further support for employment announced in the March budget was likely to be much less generous than the current furlough scheme, he said, making it likely that unemployment would rise in the second quarter as businesses asked some staff not to return.



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