Record redundancies as unemployment rises by almost a quarter of a million over the summer

Unemployment increased by 243,000 in three months to September 2020, despite the reopening of the economy, the Resolution Foundation said today (Tuesday) in response to the ONS labour market statistics.

Unemployment increased by 0.7 percentage points on the previous quarter to reach 4.8 per cent in the three months to September – the fastest increase since Spring 2009. This includes a 1.0 percentage point rise in male unemployment on the quarter (female unemployment increased by 0.4 ppts). The unemployment rate in September reached 5 per cent.

Rising unemployment in part reflects a record number of redundancies and a record increase in recent months – rising 181,000 over the quarter to 314,000.

Worryingly, the Foundation notes that while people have started looking for work after lockdown – the period saw the biggest ever net flow (215,000) of people from economic inactivity to unemployment – very few people are actually finding work. The number of people moving into new jobs has fallen by a quarter since the start of the year, and is now at its lowest level since 2009.

More positively, the numbers of job vacancies continued to recover – rising to 623,000 in October – though levels remain well below pre-crisis levels.  Recent Resolution Foundation research found that people are losing their jobs in hard-hit sectors of the economy are still looking for work in those same sectors, rather than growing sectors like health and social care.

The Foundation notes that while the continuation of the furlough scheme will continue to protect jobs, unemployment is set to continue to rising as we enter the ninth month of the crisis.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“The summer saw record redundancies and an unemployment rise of nearly a quarter of a million, as the economy reopened but firms believed the furlough scheme was being wound down.

“As the crisis enter its ninth month and second lockdown, job losses will continue to mount. Crucially this is much about those out of work struggling to find new roles as it is about job losses.

“Given these headwinds, the Chancellor is right to have to extended the furlough scheme. But much more support is needed for unemployed workers – from strengthening our safety net to investing in new job creation.”