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UK unemployment rate reaches its highest level in three years

19/10/2020

The UK unemployment rate has surged to the highest level in three years as the country continues to battle against the coronavirus.

New figures show that in the three months leading to August, the unemployment rate in the UK climbed to 4.5%. That’s up on the previous quarter’s 4.1%.

As well as a rise in unemployment rates, the Office for National Statistics is reporting that redundancies have reached their highest level in over a decade, with businesses clearly feeling the effects of coronavirus restrictions.

Now restrictions are set to be tightened all across the UK in the hope of reducing transmission of the virus, and the furlough scheme is in the process of being wound down, there is potential for more job losses further down the line.

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UK unemployment: headline figures

4.5% – UK unemployment rate in October 2020, up from 4.1% last quarter

1.5 million – the number of people in the UK who lost their jobs between June and August 2020

227,000 – the number of people made redundant in the same period

 

Who has been the worst hit by unemployment?

According to the ONS, around 1.5 million people lost their jobs between the months of June and August, while there were 227,000 redundancies in the same period.

One of the hardest hit groups were young people, in this instance those aged between 16 and 24. The statistics show that 156,000 fewer young people are employed now than were employed three months ago.

Given that young people are more likely to work in the hospitality industry – an industry that has been disproportionately affected by the pandemic – there is clearly a link between the latest figures and the decision to close hotels, restaurants, pubs, and tourist attractions at various points since March.

Now that ‘circuit breaker’ lockdowns have recently been imposed in Scotland, and England is being divided into ‘tiers’ where hospitality venues may have to close completely depending on the level assigned to their region, there’s every chance young people may be in for a difficult winter.

 

Will unemployment rates continue to rise?

The Government has been taking measures to try to protect jobs throughout the pandemic, but the latest figures point to the fact that the impact of the coronavirus on various industries is beginning to bite.

The Job Retention Scheme – better known as the furlough Scheme – has been in operation since March of this year and was paying up to 80% of the wages of employees unable to do their jobs because of the pandemic.

The furlough scheme is now being wound down. This process began in July, when the percentage of the Government’s contribution dropped from 80% to 60% of an employee’s wage. At the end of this month, the scheme will end completely.

For many employees across the UK, the only thing that has been standing between them and unemployment until now was their employer’s use of the furlough scheme. With it coming to an end soon, there is likely to be a raft of redundancies among businesses who can’t afford to pay 100% of their staff’s wages in the middle of a pandemic.

 

What support is available for those at risk of unemployment?

While the furlough scheme remains in place at the moment, it will be wrapping up at the end of this month.

It will be replaced by the Job Support Scheme, which will come into effect on November 1st and will run for an initial six months. The Job Support Scheme is another Government initiative to support people whose jobs remain affected by the ongoing pandemic.

Under the Job Support Scheme, employees who are unable to work their regular hours due to a decrease in demand can have their wages supplemented by the Government.

So long as you fulfill at least a third (33%) of your regular hours, the Government and your employer will each pay a further third of your regular wage. The aim of the Job Support Scheme is to encourage employers and industries who have been hit by the pandemic to keep their staff in jobs.

To find out more about the Job Support Scheme and whether you might be eligible for support, you can read our blog about the scheme here.

 

Where can I find out more?

You can read the original report on the state of the UK labour market in October 2020 on the Office for National Statistics website.

For more information on the Job Support Scheme, including whether you are eligible for support, you can read the Government’s policy paper on the scheme here.

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The Credifix team offers free, confidential debt advice to anyone who needs it. Give us a call on  0808 253 2966 and start taking control of your finances.

 

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