UK job losses slowed in November despite the national lockdown, according to official data that suggest the extension of the furlough scheme limited the rise in unemployment.
The unemployment rate rose to 5 per cent in the three months to November, the Office for National Statistics said on Tuesday, 0.6 percentage points higher than in the previous quarter and 1.2 percentage points higher than a year earlier. This means 418,000 people have fallen out of work since the start of the coronavirus pandemic, taking the total number of unemployed people to 1.72m.
The employment rate averaged 75.2 per cent over the three month period, 1.1 percentage points lower than a year earlier — with 18 to 24-year-olds accounting for half the drop.
However, weekly data suggest that most of the quarterly increase in unemployment came in September and October — when employers thought the furlough scheme was due to end — with the rate remaining fairly flat in November after chancellor Rishi Sunak’s last-minute decision to extend it.
“This crisis has gone on far longer than any of us hoped — and every job lost is a tragedy,” the chancellor said in response to the figures. “We’re throwing everything we’ve got at supporting businesses, individuals and families.”
James Smith, economist at ING, said the data offered “hope that the jobs market stabilised towards the end of 2020, after a turbulent autumn” — but warned that unemployment could rise again if the government withdrew support too fast.
The claimant count — a different measure of unemployment that includes people who are working on low pay and claiming benefits — increased slightly in December to 2.6m.
The redundancy rate had dropped from a peak in September by the end of November, the ONS said, although the quarterly rate of 14.2 per thousand was a record high.
Surveys conducted by the ONS suggest that up to 16 per cent of the workforce was on furlough in late November, although the number of people reporting that they were temporarily away from work was much lower than during the April lockdown, at 4.1m.
Despite the reintroduction of lockdown measures in November, total hours worked over the three-month period were higher than in the previous quarter, the ONS said. Real-time data from HM Revenue & Customs for December also suggested that employment had stabilised, after steep declines earlier in the year.
Karen Ward, economist at JPMorgan Asset Management, said the furlough scheme “set the UK up for a strong recovery if economic restrictions can be sustainably lifted in the spring”, with high aggregate household savings making consumers well-placed to spend.
However, a recovery in hiring had slowed by December, with the level of vacancies still 224,000 lower than a year earlier.
Earnings growth was also weak: the ONS said that the headline rate of total pay growth, which showed a year-on-year rise of 3.6 per cent, was driven by a fall in the number and proportion of low-paid jobs and that, after adjusting for this effect, it was likely to be under 2 per cent.
“Furlough has held back the tide on job losses,” said Nye Cominetti, senior economist at the Resolution Foundation, but added that with many more workers likely to be furloughed during the current lockdown, a big shock to jobs was still likely later this year once the scheme wound down — making further government support for incomes and employment essential.
Dave Innes, head of economics at the Joseph Rowntree Foundation, said the latest figures also showed it was “vital” to keep the £20 a week increase in universal credit put in place last year, and set to expire in April.
The ONS gave a partial response to questions raised over the reliability of the labour market statistics, which may have been skewed by an exodus of foreign-born workers not yet captured in population data. The agency said the rates published based on its labour force survey remained “robust and reliable” but that levels, and changes in levels, should be used with caution.