UK unemployment rate climbs to 4.8% as redundancies rise

The UK unemployment rate hit 4.8% in the three months to September, according to new data published by the Office for National Statistics (ONS).

The latest unemployment figure was 0.9% higher than a year ago and 0.7% higher than the previous quarter.


Early estimates for October suggest that there was a slight drop over the month in the number of payroll employees in the UK, the ONS stated. Since March, the number of payroll employees has fallen by 782,000, although the larger falls were seen at the start of the coronavirus pandemic.

The ONS also revealed that redundancies have reached a record high in the most recent period, but added that total hours worked, while still low, have shown signs of recovery. The latest data showed the employment rate in the three months to September was estimated at 75.3%, which is 0.8% lower than a year ago, and 0.6% lower than the previous quarter.


However, in the three months to September, redundancies reached a record high of 314,000 – an increase of a record 181,000 on the quarter.

AJ Bell financial analyst, Laith Khalaf, commented: “The vaccine breakthrough will give businesses greater confidence that an end to the pandemic is in sight and will encourage them to retain staff for a bit longer. For now though, the statistics are pretty grim, and are likely to get worse before the cavalry arrives.
 
“The third quarter was a record-breaking period, not just in the scale of the redundancies witnessed, but in the distortions happening within the labour market. That’s clearly a sign of a system under stress as people shift their behaviour to cope with the economic shock of the pandemic.”

Phoebus Software sales and marketing director, Richard Pike, suggested that the UK appears to be on an “employment knife-edge”.

“The sharp rise in redundancies, coupled with rising unemployment and benefit claimants, will put further pressure on lenders in terms of forbearance measures required to manage borrowers through these turbulent times,” he added.

“We await to see the full effect the governments’ u-turn on the furlough scheme will have, but with the extension until March, it is clear that the government doesn’t see any significant COVID-19 improvement before Q2 next year.
 
“On this basis, it is more important than ever that lenders keep full records of why borrowers have been offered certain forbearance options against all of those that are available, as if this is queried in the future this could lead to a large increase in complaints.”

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