Jobless rate rises as firms warn more jobs at risk before lockdown eases

A person leaves a branch of Jobcentre Plus, a government run employment support and benefits agency, as the outbreak of the coronavirus disease (COVID-19) continues, in Hackney, London, Britain, August 6, 2020. REUTERS/John Sibley

New figures show the state of employment in the UK. Photo: REUTERS/John Sibley

Unemployment continues to rise in the UK, hitting 5.1% in December.

The unemployment rate rose to 5.1% of the workforce in the three months to December, according to the latest data available from the Office for National Statistics (ONS). It marks a five year high for unemployment. December’s figure was up from 5% a month earlier.

More recent payroll data shows employers have now slashed 726,000 jobs since February 2020, although there was an increase in payroll numbers month-to-month. Job cuts have fallen most heavily on 18 to 24 year olds, the ONS said.

Payroll numbers have fallen by over 700,000 since the pandemic began. Photo: ONS

Payroll numbers have fallen by over 700,000 since the pandemic began. Photo: ONS

The UK employment rate stood at 75%, which was down 1.5% on a year ago. The claimant count, which includes those working and claiming low income benefits, rose to 2.6m.

The COVID-19 pandemic has led to surging unemployment as thousands of businesses have been forced to shut. Boris Johnson on Monday unveiled a “roadmap” for easing lockdown restrictions in England from next month.

The plan could see non-essential retail, leisure and outdoor hospitality sites reopen from 12 April. International travel, indoor hospitality and hotels could resume from 17 May. Virtually all limits on social contact lifted from 21 June.

READ MORE: Prime minister Boris Johnson unveils four-stage plan to reopen economy

Business chiefs are demanding more help from the government statement next week, warning that jobs and companies are still on the line.

“While the furlough scheme is limiting job losses, the rise in unemployment and decline in employment levels are further evidence that coronavirus continues to weaken the UK labour market,” said Suren Thiru, head of economics at the British Chamber of Commerce.

“With firms facing a renewed cash crisis amid the current lockdown and the prospect of several more months of diminished demand and revenue before many can fully reopen, substantial job losses maybe inevitable if the support schemes wind down as planned.”

The furlough wage subsidy scheme, designed to stop redundancies, is due to end by May.

“Hundreds of thousands of jobs that simply will not be there without a substantial package of compensation,” said Kate Nicholls, chief executive of UKHospitality.

UK Chancellor Rishi Sunak said: “I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy. That’s why throughout the crisis, my focus has been on doing everything we can to protect jobs and livelihoods.

“At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery.”

WATCH: Prime minister Boris Johnson unveils plan to ease England lockdown

Mike Cherry, national chairman of the Federation of Small Businesses (FSB), warned on Monday night that official employment statistics “do not fully reveal the challenges currently faced in the jobs market.”

UK unemployment data is less up-to-date than in the US. Critics say the definition of unemployment is also too narrow. The figures exclude workers not “actively” searching for work or immediately available to start, though officials say they are only following international reporting standards.

The Resolution Foundation think tank warned last week 1.9 million people had been unemployed or furloughed for at least six months during the pandemic.

READ MORE: Vacancies jump as vaccine effect gives UK a ‘major jobs boost’

Signs are growing that Britain’s vaccine rollout is boosting employer sentiment. The proportion of employers expecting to add jobs is at its highest level in a year, according to a closely watched survey by the Chartered Institute of Personnel & Development (CIPD) and Adecco published on Monday.

The survey of 2,000 employers in January found more than half were looking to recruit in the first quarter of 2021. Optimism did not extend to sectors hit hard by social distancing such as hospitality, however.

Meanwhile data from jobs site Adzuna earlier this month found a 16% jump in vacancies between the first and last weeks of January.

The ONS said job vacancies were currently 26% below where they were a year ago. That marked an improvement on the 60% slump seen during the worst point of the pandemic.