UK redundancies rise at record rate amid Covid fallout

The number of redundancies in the UK has risen at the fastest rate since records began as the economic fallout from Covid-19 and scaling-back of the government’s furlough scheme drives up unemployment.

The Office for National Statistics said 227,000 redundancies were made in the three months to August, an increase of 114,000 from the level in June and the fastest rise on record.

Against a backdrop of rising concern over job losses as the government scaled back the furlough scheme, the headline unemployment rate increased to 4.5% in the three months to August – representing 1.5 million people out of work – up from 4.1% in July.

The figures come after the chancellor, Rishi Sunak, announced an expansion of the government’s job support scheme last week to protect jobs at businesses forced to close their doors by harsh local lockdown restrictions.

However, the chancellor had insisted throughout the summer that furlough would end in October before staging the 11th-hour reprieve amid growing pressure.

Paul Dales, the chief UK economist at the consultancy Capital Economics, said the combination of the end of the furlough scheme and new Covid-19 restrictions “may extinguish the economic recovery for a few months” and drive up unemployment to as much as 8%.

Responding to the latest figures from the jobs market, Sunak said: “I’ve been honest with people from the start that we would unfortunately not be able to save every job. But these aren’t just statistics, they are people’s lives. That’s why trying to protect as many jobs as possible and to helping those who lose their job back into employment, is my absolute priority.”

Despite grim prospects for Britain’s economy as the second wave of coronavirus takes hold, the latest figures from the jobs market also showed some signs of improvement over the summer months.

Figures from HMRC showed the number of staff on company payrolls rose by 20,000 in September, slightly reducing the total number of job losses recorded by the tax office since the start of the pandemic to 673,000.

There were some other potentially positive signs, including a record rise in the number of job vacancies in the three months to September, although the number of positions being advertised is still down 40% compared with a year ago.

Business leaders warned the government would still need to provide further support to businesses and workers to protect jobs through a difficult winter. Tej Parikh, the chief economist at the Institute of Directors, said: “Job losses are likely to keep mounting as this turbulent year draws to a close.”

“With the furlough scheme unwinding, cash-strapped firms have been forced into difficult decisions about retaining their staff. Demand remains weak and as restrictions ramp up again many businesses will be stretched when it comes to paying wage bills. The job support scheme may need to be beefed up if the government wants to avert further rises in unemployment.”

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