The number of people out of work has increased to a two-year high, with further job losses expected and the Tory government warned that “the threat of mass unemployment is very real”.
Figures published by the Office for National Statistics on Wednesday for May to July 2020 show an increase in the official unemployment rate, from 3.9% to 4.1%.
This is despite a rise in the employment rate and fewer working-age adults regarded as ‘economically inactive’ (not looking or available for work).
The ONS says that whilst the number of people who are estimated to be temporarily away from work (including furloughed workers) is declining, it was still more than 5 million in July 2020 and over 2.5 million of these have been away from work for three months or more.
There were also around 250,000 people away from work because of the pandemic and receiving no pay whatsoever in July 2020.
Early indicators for August 2020 suggest the number of employees in the UK on (PAYE) payrolls fell by around 695,000 compared with March 2020, with young people (18-24) hit particularly hard.
The Claimant Count reached 2.7 million in August 2020, an increase of 120.8% since March 2020. This includes both those working with low income or hours and those who are not working.
Responding to the latest ONS figures, TUC General Secretary Frances O’Grady said: “These are deeply worrying figures.
“With state support coming to an end the threat of mass unemployment is very real. Ministers must act now to protect and create jobs.
“That means building on the furlough scheme by setting up a new job retention and upskilling deal, to keep people employed at firms that have a viable future.
“And it means creating good new jobs too. Recent TUC analysis shows the government could create 1.85 million jobs in two years by fast-tracking green infrastructure investment and unlocking 600,000 public sector vacancies.
“When the crisis began, the Chancellor said he would do ‘whatever it takes’. He must keep that promise.”
Jonathan Reynolds MP, Labour’s Shadow Work and Pensions Secretary, said: “These new figures are deeply concerning, over 5 million people are not working and 2.5 million have been out of work for three months or more.
“Unemployment will continue to rise unless the Government acts now and adopts a more flexible approach targeted at the sectors that need it most.”
SNP Shadow Chancellor Alison Thewliss MP said the UK government “has been too slow to act to save jobs – with unemployment hitting a two year high and warnings of mass redundancies in the autumn.”
She added: “The Chancellor has been warned repeatedly that he must extend the furlough scheme, deliver a major fiscal stimulus, and devolve financial powers to the Scottish Parliament – or thousands of people will lose their jobs unnecessarily.”
The Chancellor of the Exchequer, Rishi Sunak, said: As today’s official employment figures today show, the furlough scheme has done what it was designed to do – save jobs and help people back to work, where they want to be.
“We were clear at the start of the pandemic that we couldn’t save every job, but the furlough scheme has supported millions of workers and we want to help employers keep people on.
“Our Job Retention Bonus will do exactly that, supporting businesses to do the right thing.”