Business groups calls for action as unemployment rises


Date: 15 December 2020

The latest government data shows that unemployment reached 4.9% in the three months to October, redundancies hit a new high and the number of UK self-employed workers continued to fall.

Unemployment has risen but it is likely to get a lot worse according to the UK's leading business groups. The latest labour market statistics from the Office for National Statistics (ONS) show that unemployment stood at 4.9% in the three months to October after a record 370,000 redundancies.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: "The re-introduction of tighter restrictions and the expected cliff edge caused by the original furlough scheme end date in October helped drive record redundancies."

However, he warned that worse is to come. "While the furlough scheme will help safeguard many jobs over the winter months, with businesses facing the prospect of further restrictions and a messy end to the Brexit transition period, major job losses remain probable in the near term."

The BCC is calling on the government to do more. Thiru said: "To help protect jobs and livelihoods, increased grant funding to ease the current squeeze on business cashflow and closing the gaps in government support remains vital. Delivering a UK-EU trade deal that provides clarity and certainty to businesses is crucial to avoid further damaging the UK jobs market already weakened by the pandemic."

The Institute of Directors (IoD) has raised the same concerns. Tej Parikh, IoD chief economist, said that the extension of the furlough scheme will "provide a lifeline for many jobs over the difficult winter months, but the big question is what happens after".

To avoid a further uptick in unemployment at the end of Q1 2021, Parikh said the Treasury should consider measures to encourage job creation. "A relief for employers' national insurance contributions, for example, could ease cash flow difficulties and put the jobs market in a stronger position come the end of the furlough scheme. It's crucial that March doesn't become another cliff-edge, business leaders have already seen far too many of those of late."

The Chartered Institute for Personnel and Development (CIPD) has called for an extension to the furlough scheme until June 2021. Gerwyn Davies, CIPD senior labour market adviser, said: "The worry is that the record increase in redundancies will add fuel to the rising jobless count in the coming months. The government needs to consider extending the Job Retention Scheme to the end of June to keep a lid on unemployment; especially for sectors that will continue to be subjected to public health restrictions. In addition, the government should significantly raise public skills investment to help upskill or retrain staff in sectors hardest hit by the pandemic and for those who have been made redundant during this period."

Written by Rachel Miller.

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