International

Unemployment rate hits highest level in three years

The UK unemployment rate has surged to its highest level in over three years as the pandemic continues to hit jobs.

The unemployment rate grew to 4.5% in the three months to August, compared with 4.1% previously.

Meanwhile, redundancies rose to their highest level since 2009, the Office for National Statistics (ONS) said.

It comes as the government prepares to impose tough local lockdown rules that will force some businesses to close.

The ONS’s deputy national statistician for economic statistics, Jonathan Athow, said there had been a “sharp increase” in those out of work and job hunting since March.

“Overall employment is down about half a million since the pandemic began and there are particular groups who seem to be most affected, young people in particular,” he told the BBC’s Today programme.

“Of those out of work about 300,000 are aged 16-24, so about 60% of the fall in employment… that’s really disproportionate.”

He said the large number of redundancies had been focused on certain sectors. “So you’re seeing things like hospitality having high levels of job losses. Also some places like travel agencies and employment agencies.”

According to the ONS, an estimated 1.5 million people were unemployed between June and August, while redundancies stood at 227,000.

The number claiming work related benefits, meanwhile, hit 2.7 million in September – an increase of 1.5 million since the beginning of the crisis in March.

Most expect unemployment to rise further after the government’s furlough scheme is replaced with a less generous wage support package in November.

Analysis from Citibank suggests the unemployment rate could hit 8.5% in the first half of 2021 – a level not seen since the early 1990s.

Commenting on the latest unemployment figures, Chancellor Rishi 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.”

He said for those who do lose their job, there would be new opportunities through apprenticeships, traineeships and the £2bn Kickstart scheme, as well as extra work search support.

The headline jobs numbers are beginning to catch up with grim jobs numbers elsewhere. Unemployment above 1.5 million and the rate at 4.5% represent considerable rises over the third quarter, and three year-highs, though still relatively low by international and historic standards.

The redundancy numbers were up in the quarter to August by a record, partly reflecting the start of the phased withdrawal of the furlough scheme.

There were some signs that the government’s attempt to reopen and boost the economy had some impact. Payroll numbers stabilised, up a little, though still 629,000 down on March. Vacancies were up too during the month of “Eat Out to Help Out”.

So these numbers reflect both the headline numbers catching up with the grim reality of the jobs market since the shutdown – but also a bump to certain parts of the economy in August. The numbers will continue to get tougher from here.