'On the precipice of an unemployment crisis'

The number of UK redundancies have skyrocketed at a record rate, with almost a quarter of a million redundancies made in the three months to August, the latest unemployment figures show.

The latest redundancy figures represent an increase of 114,000 from the previous three months to June – the fastest rate of increase since records began, according to the Office for National Statistics. (ONS).

 The headline unemployment rate has now grown to 4.5 per cent at the end of August, up from 4.1 per cent at the end of July – representing the highest headline rate in three years.

The ONS has highlighted that an astonishing 1.5m people were unemployed between June and August, with young people in particular being hard-hit by job losses.

Speaking to the BBC Today Programme, ONS deputy national statistician for economic statistics Jonathan Athow said, “Overall employment is down about half a million since the pandemic began and there are particular groups who seem to be most affected, young people in particular.”

He added that about 300,000 of those now unemployed are aged 16-24, accounting for 60 per cent of the overall fall in employment – which he said was “really disproportionate”.

Unsurprisingly, the greatest numbers of redundancies were concentrated in the hospitality, travel and recruitment sectors, with part-time and self-employed workers also bearing the brunt of job losses.

Meanwhile, the number of people claiming unemployment benefits has surged to a total of 2.7m in September, up 1.5m since the pandemic first swept the UK in March.

Local lockdowns

The latest grim figures come as the government has announced a new three-tiered system of local lockdowns, with the Liverpool region being hit with the most stringent tier-3 lockdown, where pubs and some other businesses will be forced to close from Wednesday (October 14).

Large parts of the North will be under a tier-2 lockdown, which bans households mixing indoors, while the rest of the UK will be under tier-1 restrictions, where people cannot mix in groups of more than 6. Under both tier-1 and -2 restrictions, pubs, restaurants and other hospitality venues must close by 10pm.

As stricter restrictions are imposed throughout the UK, job loss fears have mounted especially in the hospitality sector. Chancellor Rishi Sunak announced last week a new package of wage support for businesses that are legally forced to shut under the new restrictions. But this new wage subsidy was heavily criticised for being far less generous than the previous furlough scheme – workers will only be paid 67 per cent of their wages, compared to 80 per cent under initial furlough arrangements. For the legions of workers on minimum wage, this may mean the difference between barely eking out a living and not being able to survive.

The Chancellor’s Job Support Scheme, available to business which are operating but have been impacted by the coronavirus crisis, is also again much less generous than furlough and requires firms to make large contributions to wages to keep workers on shorter hours.

It is expected that the scheme, which begins November 1, will not be enough stem further job losses because it will cost employers more to retain two workers part-time than it will to simply keep one worker full-time.

More wage support call

Commenting on the latest unemployment figures, TUC general secretary Frances O’Grady said, “We are on the precipice of an unemployment crisis. Ministers must act now to protect and create jobs. The expansion of the job support scheme is a step in the right direction, but it still falls short.

“Wage replacement should be 80% for businesses who have to shut,” she added. “We need a more generous short-time working scheme for firms which aren’t required to close but will be hit by stricter local restrictions. And self-employed people in local lockdown areas need help too.

“Ministers must do more to create good new jobs. TUC research shows that we could create 1.2 million new jobs in the next two years in green transport and infrastructure, and another 600,000 by unlocking public sector vacancies.”

Unite has also called for further support for northern communities hit by stringent lockdowns to avert a crisis of unemployment and widespread financial hardship.

Unite regional secretary for the North West Ritchie James commented ahead of the Liverpool region being placed on a Tier-3 lockdown on Monday (October 12), noting that government wage support was not enough for those hit by business closures.

He called the localised locdown support for workers forced to stay home “inadequate, especially for those on low wages”.

“People can barely afford to live on the minimum wage as it is, so how does the government expect them to live on just two thirds of that?” he noted. “Rishi Sunak needs to rethink his approach and provide at least the level of support provided when the jobs retention scheme was announced in March.”

Unite general secretary Len McCluskey also called for more government support.

“Wages support for the north as the region battles this disease is certainly welcome, however we have to question why it is set at only two thirds of wages and not the 80 per cent provided in March,” he said. “Bills haven’t fallen, so why has the level of wage support? Workers need to know that the mortgage and rent can be covered, and that food can be put on the table, but employers also need to feel that they are getting the support they need to keep people in employment.

“The country is at a fresh crossroads with this virus and we back all efforts to suppress it, but we urge the chancellor to recognise that this is the moment to revisit his winter economic plan,” he added. “More support is needed to save jobs and protect incomes and he must use the wealth of our nation to provide it.

“I repeat the call from across the labour movement for the chancellor and the government to work with unions and employers now on a plan to create and save jobs in the immediate and longer term. This is a national emergency and as such requires the government to unite the talents of the country to protect the public’s health and our economy.”

By Hajera Blagg