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UK Unemployment Rate Grows By 4.5%

The effect of the coronavirus pandemic on the British economy continues to be felt, as the latest figures show the unemployment rate is at its highest in more than three years. A rise of 4.5% has caused concern, although recent growth in the number of vacancies gives some cause for optimism.

The Numbers in Full

The 4.5% rise in unemployment is based on the three-month period to August, and this compares to 4.1% seen in the quarter before that. The Office for National Statistics (ONS) also pointed out that the level of redundancies in the country was as high as it has been since 2009.

Figures from the ONS show that 1.5 million people were classed as being unemployed in the period from June to August. In addition, 227,000 new redundancies were reported during these three months.

In September, 2.7 million people were claiming some sort of work-related benefits, which was an increase of 1.5 million on the amount doing this in March. The number of vacancies rose modestly in September, by 4%.

Jonathan Athow is the deputy national statistician for economic statistics at the ONS. He confirmed that overall employment numbers are around 500,000 less than before the pandemic began, with fewer people looking for work too.

Who Has Been Most Affected?

According to Athow, “young people in particular” have been hit hard by this jobs crisis. He said that about 300,000 of those newly out of work are in the 16-24 age category, which is around 60% of the overall total.

He also pointed out that certain sectors of the economy have been hit harder than others in the crisis. Those that are most deeply affected include travel and hospitality. However, businesses in other industries have also used international commercial debt recovery to try and cope.

The prospect of tougher lockdown restrictions across parts of the country has also raised fears that more businesses won´t be able to cope with the economic impact of having to close or work for reduced hours.

Who Can We Expect to See in the Future?

Most analysts think that the unemployment situation in the UK will get worse in the next few months, as the furlough scheme winds down and is replaced by a wage support initiative that puts more emphasis on employers to pay their staff´s wages.

The unemployment rate could be as high as 8.5% in the first six months of 2021, which would be higher than at any time since the start of the 1990s. Other sources fear that it could climb as high as 10% before things get better.

The TUC have said that the country is at risk of an “unemployment crisis” and that the government should replace 80% of wages for companies that have been forced to close.

The trade union body called for extra help for self-employed people in lockdown areas, as well as a more generous approach to a short-time working scheme in the case of those businesses that need to cope with tougher restrictions.