Record rise in redundancies in the run-up to second lockdown

The labour market continued to deteriorate in the run-up to the second national lockdown in November, with 370,000 redundancies taking place in August to October, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market statistics.

The latest data, which covers the period running up to the second national lockdown and the extension of both the furlough scheme and support for the self-employed, showed another rise in unemployment – hitting 5.2 per cent in the single month of October.

The recent rise is unemployment is being driven by falling economic inactivity, suggesting that people are looking for work again.

The latest increase included a record quarterly rise in female unemployment (up 0.6 ppts) – though overall male unemployment has increased more over the course of the pandemic (up 1.3 and 1 ppts for men and women respectively on the year).

HMRC data for November 2020 showed that of the 819,000 fall in employee jobs since the pandemic, around a third came from the hard-hit hospitality sector. Job losses in the sector are likely to have worsened during the November lockdown and ongoing significant restrictions in December.

More positively, hospitality – which was expanding rapidly in the years running up to the pandemic – should be well placed to bounce back in 2021 once the vaccine is rolled out and people are able to spend the savings accumulated over 2020, says the Foundation.

It adds that the extension of the Job Retention Scheme will have protected millions of jobs this winter, with vacancies remaining a third down on pre-crisis levels, and falling by 66,000 in the latest single-month data (November).

With unemployment likely to continue rising in early 2021, it is vital that the Government avoids deepening the hit to family incomes that will follow by maintaining the £20 a week boost to Universal Credit, says the Foundation.

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

“The labour market continued to deteriorate as infections grew – and restriction increased – in the run-up to the second lockdown. Hospitality continues to be worst affected by Britain’s jobs crisis.”

“The extension of jobs support schemes will have protected millions of jobs and kept a lid on rising unemployment over the winter. But with vacancies still a third down on pre-crisis, and significant social distancing restrictions likely to be required well into 2021, unemployment will continue to rise in the new year.

“The labour market priority for 2021 should be to support jobs creation, and maintain the stronger safety net for those who are struggling to find work.”