Record redundancies, rising unemployment and fewer job opportunities. Even before the second Covid wave forced the launch of lockdown 2.0, workers were feeling the pinch.
In the three months to September, the latest official figures show redundancies soared to 314,000, outstripping the damage done by the 2008 financial crisis in speed and severity. Unemployment jumped to 4.8%, the highest in four years.
It is clear to see why Rishi Sunak was backed into a corner with no choice but to extend the furlough scheme until the end of March.
UK unemployment rate jumps to 4.8% as redundancies hit record high – business live
Back in September, the chancellor was still hoping the summer reopening of the economy would be enough to kickstart the jobs market, as he steadily scaled back the support programme.
Despite repeat warnings from business leaders, Sunak insisted it was not right to endlessly extend furlough. Hard choices needed to be taken to help protect the public finances. “As the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough,” he said.
The words would come to haunt the chancellor on Halloween. Five hours before the scheme was due to end, it was clear the second Covid wave and tougher new restrictions would require a screeching U-turn.
The trouble now for Sunak is that his actions will be criticised for coming far too late for thousands of people.
Early figures from HMRC suggest 33,000 people were removed from company payrolls in October, at a time when Sunak still insisted furlough would close at the end of the month. The replacement programme – tossed from the drawing board last week after several rewrites – wasn’t enough for these workers.
To be sure, the scale of the damage from Covid-19 and the deep structural changes it has unleashed will have cost thousands of people their jobs regardless of Sunak’s actions or the timing of the furlough announcements. The number of jobs cut from company payrolls in October is also far lower than during the spring, when the first lockdown shattered the jobs market.
Official jobless figures for October will however be published next month, when the recriminations will undoubtedly continue as the economic outlook worsens. Unemployment is still expected to reach 7.75% by the middle of next year by the Bank of England.
After a stop-start, chop-change approach to furlough, the pressure on Sunak will quickly turn to supporting people who are out of work. Millions slipped through holes in the safety net earlier this year, many of them self-employed. With more people out of work, reforms to boost the benefits system and plans to create jobs will be increasingly called for.
The number of jobs vacancies has recovered gradually over the summer months but still remains about a third of the levels a year ago, and at the lowest level for seven years. With a second lockdown and tough winter ahead, many firms are, however, unlikely to be hiring soon.
After extending furlough, the chancellor now has an opportunity to get ahead of the troubling economic data.
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