The number of people being made redundant in the UK soared to a record high in October amid the second coronavirus wave and as the government scaled back its furlough scheme before an 11th hour extension.
The Office for National Statistics said redundancies rose to 370,000 in the three months to October, fuelled by job losses in retail and hospitality, during a period when the flagship wage subsidy scheme became less generous and was due to close at the end of the month.
However, the government staged a last-minute U-turn to extend the scheme until the end of March, as rapid growth in coronavirus infections led Boris Johnson to impose a second national lockdown in England from November and as tougher controls were used in Scotland, Wales and Northern Ireland.
The ONS said the 217,000 quarterly increase in redundancies was unprecedented and pushed up the headline UK unemployment rate to 4.9%, up slightly from 4.8% in the three months to September.
In a reflection of the devastating impact of the pandemic on the jobs market, the latest figures from HMRC showed there were 820,000 fewer employees recorded on company payrolls in November than in February before the pandemic struck, with more than a third of the reduction coming from the hospitality sector.
However, while the number of people being made redundant hit a fresh record, the ONS said there were signs the pace of job cutting eased towards the end of October. According to a survey of company bosses by the statistics agency, 7% of businesses surveyed between 19 October and 1 November planned to make redundancies within the next three months, compared with 9% in a survey between 5 and 18 October.
Business leaders said the reintroduction of tighter restrictions and the expected cliff edge from the furlough scheme drove up redundancies. Suren Thiru, the head of economics at the British Chambers of Commerce, said extending the wage subsidy scheme would help to protect jobs over the winter months, but that a messy Brexit would further drive up unemployment.
“Failure to achieve a UK-EU trade deal risks adding to the longer-term structural unemployment caused by the pandemic by limiting the competitiveness and viability of some industries,” he said.
Mims Davies, the employment minister, 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.
“Our plan for jobs is already helping people of all ages into work right across the UK, with increased jobcentre support, new retraining schemes, new job placements like Kickstart for our young people and more to come as we are determined to build back better.”
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