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UK redundancies rise at fastest rate since 2009 amid Covid crisis

5 Mins read

The number of redundancies in the UK has accelerated at the fastest pace since the financial crisis as the economic fallout from the coronavirus pandemic triggers rising levels of unemployment.

Against a backdrop of mounting concern over a jobs crisis this autumn as the government’s furlough scheme comes to an end, the Office for National Statistics (ONS) said 156,000 people were made redundant in the three months to July. This is an increase of 48,000 from the three months to the end of May, and the sharpest quarterly rise since 2009.

As Britain’s economy plunged into the deepest recession since modern records began during the coronavirus lockdown, the ONS said early indicators from HMRC showed 695,000 workers had dropped from company payrolls since the pandemic began in March, with the brunt of the jobs crisis being borne by younger workers.

With young people more likely to work in sectors of the economy hit hardest during lockdown – such as hospitality, food service, the arts and entertainment – the number of 16- to 24-year-olds in employment fell by 156,000, more than any other age group.

Despite the furlough scheme preventing a sharper rise in unemployment during summer as millions of workers temporarily stayed away from their jobs, the unemployment rate increased to 4.1% in the three months to the end of July, representing about 1.4 million people out of work. Although only a slight increase from 3.9% in the three months to the end of June, the Bank of England expects the rate to double to 7.5% before the end of the year as furlough ends in October, which would mean about 2.5 million unemployed.

The ONS said the number of people temporarily away from work – including furloughed workers – had fallen as the economy gradually reopened after lockdown and more people returned to their jobs. However, it was still more than 5 million in July, with more than 2.5 million people away from their jobs for three months or more. There were also about 250,000 people away from work and receiving no pay because of the pandemic.

Adding to calls from the Labour leader, Kier Starmer, the Confederation of , the Confederation of British Industry said a successor to the job retention scheme was urgently needed to protect jobs and businesses. Matthew Percival, the director of people and skills at the business lobby group, said: “Rising redundancies, rising unemployment and a record fall in the number of young people in work are clear warning signs of what is to come.”

Jonathan Reynolds, the shadow work and pensions secretary, said: “Unemployment will continue to rise unless the government acts now and adopts a more flexible approach targeted at the sectors that need it most.”

More than 9m jobs have been furloughed since the scheme was launched in March. Although the latest figures show many people have returned to work, economists expect more than 1 million workers will still be furloughed when the scheme ends because of continuing pressure on businesses from local lockdowns and other restrictions to limit the spread of Covid-19.

“All the evidence is pointing to a mounting jobs crisis across Britain,” said Nye Cominetti, a senior economist at the Resolution Foundation. “The reopening of the economy this summer after lockdown may have boosted economic activity, but it has not spurred a recovery in the jobs market, with unemployment and redundancies rising sharply in July.”

Sunak said: “This is a difficult time for many as the pandemic continues to have a profound impact on people’s jobs and livelihoods. That’s why protecting jobs and helping people back into work continues to be my number one priority.”

The number of redundancies in the UK has accelerated at the fastest pace since the financial crisis as the economic fallout from the coronavirus pandemic triggers rising levels of unemployment.

Against a backdrop of mounting concern over a jobs crisis this autumn as the government’s furlough scheme comes to an end, the Office for National Statistics (ONS) said 156,000 people were made redundant in the three months to July. This is an increase of 48,000 from the three months to the end of May, and the sharpest quarterly rise since 2009.

As Britain’s economy plunged into the deepest recession since modern records began during the coronavirus lockdown, the ONS said early indicators from HMRC showed 695,000 workers had dropped from company payrolls since the pandemic began in March, with the brunt of the jobs crisis being borne by younger workers.

With young people more likely to work in sectors of the economy hit hardest during lockdown – such as hospitality, food service, the arts and entertainment – the number of 16- to 24-year-olds in employment fell by 156,000, more than any other age group.

Despite the furlough scheme preventing a sharper rise in unemployment during summer as millions of workers temporarily stayed away from their jobs, the unemployment rate increased to 4.1% in the three months to the end of July, representing about 1.4 million people out of work. Although only a slight increase from 3.9% in the three months to the end of June, the Bank of England expects the rate to double to 7.5% before the end of the year as furlough ends in October, which would mean about 2.5 million unemployed.

The ONS said the number of people temporarily away from work – including furloughed workers – had fallen as the economy gradually reopened after lockdown and more people returned to their jobs. However, it was still more than 5 million in July, with more than 2.5 million people away from their jobs for three months or more. There were also about 250,000 people away from work and receiving no pay because of the pandemic.

The figures come as pressure grows on the chancellor, Rishi Sunak, to extend the furlough scheme or boost the level of financial support for the hardest hit businesses and workers.

Adding to calls from the Labour leader, Kier Starmer, the Confederation of British Industry said a successor to the job retention scheme was urgently needed to protect jobs and businesses. Matthew Percival, the director of people and skills at the business lobby group, said: “Rising redundancies, rising unemployment and a record fall in the number of young people in work are clear warning signs of what is to come.”

Jonathan Reynolds, the shadow work and pensions secretary, said: “Unemployment will continue to rise unless the government acts now and adopts a more flexible approach targeted at the sectors that need it most.”

More than 9m jobs have been furloughed since the scheme was launched in March. Although the latest figures show many people have returned to work, economists expect more than 1 million workers will still be furloughed when the scheme ends because of continuing pressure on businesses from local lockdowns and other restrictions to limit the spread of Covid-19.

“All the evidence is pointing to a mounting jobs crisis across Britain,” said Nye Cominetti, a senior economist at the Resolution Foundation. “The reopening of the economy this summer after lockdown may have boosted economic activity, but it has not spurred a recovery in the jobs market, with unemployment and redundancies rising sharply in July.”

Sunak said: “This is a difficult time for many as the pandemic continues to have a profound impact on people’s jobs and livelihoods. That’s why protecting jobs and helping people back into work continues to be my number one priority.”

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