"Worrying", "sobering" and "bleak": UK business leaders react to new ONS unemployment figures
This morning the Office for National Statistics (ONS) announced that unemployment across the UK had risen to 4.5 per cent in the three months up to August.
It was revealed by the ONS that the number of unemployed people increased by 138,000 over the three month period.
Bdaily spoke with firms and organisations around the country to get their reactions to the figures.
Dr Joe Marshall, chief executive of the National Centre for Universities and Business (NCUB)
“The new figures published today by the ONS further demonstrate the severity of the unemployment problem we are facing in the wake of Covid-19.
“Today’s new statistics reveal that the number of employees in the UK on payrolls is now down around 673,000 compared with March 2020.
“What’s more, redundancies have reached the highest level since May to July 2009, in the midst of the last global recession. More worryingly still, recent patterns demonstrate that this problem has impacted the nation’s young people disproportionately.
“The Resolution Foundation has recently warned that youth unemployment could rise to around 17 per cent - the same level as the early 1980s peak – we therefore urgently need to do more to help young people.
“We need to see further decisive action from the government to reverse the huge falls in employment resulting from the recent shock of the pandemic.”
“Time is running out and the Government must act now to save a generation of talent and safeguard our future prosperity. We need decisive action from the Government to help young people into employment and help employers to retain talent and valuable entry level jobs.
“It’s imperative [for] employees and employers alike. We are calling on the Government to temporarily abolish National Insurance Contributions for young people under the age of 25, meaning the cost of hiring is lower.
“Without support, young people will face unemployment or lower wages, and employers will lose out on the innovative, talented workforce they need to recover.
“These new figures today truly hammer home the scale of the crisis we face and demonstrate the need to fundamentally evaluate our future labour needs and develop suitable policies in response. We urge the Government to take this seriously.”
Laith Khalaf, financial analyst at AJ Bell
“Unemployment isn’t high by historical standards, but the picture is clearly deteriorating. We’re beginning to see what the economic wound looks like as the bandage of furlough is gradually removed.
“August was the month where employers started to pay towards the cost of furloughed employers - only employer National Insurance payments and pension contributions at that point, but even more is required in September and October.
“The new Jobs Support Scheme will help to cushion the blow, but we’re likely looking at the thin end of the wedge when it comes to unemployment.
“The picture is not uniform across the country either, with the unemployment rate jumping by 1.4 per cent to 6.6 per cent in the North East, while the rate actually fell in the West Midlands, by 0.4 per cent to 4.6 per cent.
“Northern Ireland has the lowest rate overall at 3.7 per cent, though this is up 1.2 per cent on the previous quarter. Now COVID restrictions are a more localised phenomenon, we can expect patchy economic impacts across the UK.
“Total pay came in at nil, an improvement from the last reading of -1 per cent, though in real terms that’s still 0.8 per cent lower than the same period last year.
“Regular pay rose by 0.8 per cent, or 0.1 per cent in real terms. Prior to the financial crisis regular pay growth was averaging about 4 per cent a year, or 2 per cent above inflation.
“Since October 2008, wage growth has averaged 2 per cent, and is flat after factoring in inflation. In other words, wages have gone nowhere in 12 years in real terms. Given what’s happened to house prices over the same period, it’s no wonder so many people can’t afford to get on the housing ladder.
“Looking forward, things look set to get worse before they get better for the UK economy, as furlough expires and greater social restrictions are enforced, albeit not nationwide. The huge cost of the COVID crisis response also needs to be reckoned with.
“The IFS estimates borrowing will hit £350bn this year, a level never seen in peacetime Britain. The government will probably wait until it can at least see the edge of the woods before it lays out its plans to balance the books, but tax rises looks set to be on Rishi’s menu.”
Niamh Corcoran, policy adviser at North East England Chamber of Commerce
“The labour market figures released today make for worrying reading, with employment falling and unemployment spiking in the North East.
The region’s employment rate fell by 2.1 per cent on the previous quarter, the largest fall of any region over the last three months. The North East now finds itself with the highest unemployment rate, the lowest employment rate and the lowest average hours worked of all British regions.
“There are a lot of firms re-opening and continuing to trade strongly but we do have to be aware that there are very likely more redundancies to come. We haven’t seen the peak spike yet.
“After months of the Job Retention Scheme masking the true impact of the crisis on the labour market and propping up the employment rate, it is clear now that the pandemic is beginning to take its toll.
“Worryingly, with the end of the Job Retention Scheme fast approaching, as well as the threat of tighter Coronavirus restrictions in the North East looming, we would expect to see this trend continue.
“Although the government’s amendments to the Jobs Support Scheme offers some support for our region in the event of tighter restrictions, it does not go far enough.
“The North East urgently needs stronger economic support for the hardest hit businesses in order to protect jobs, as well as a long-term strategy for retraining and job creation. We also need to see support for our business start-ups.
“Our region needs to see swift and decisive action from government to avoid record unemployment and long-term economic scarring.”
Philip Richardson, partner and head of employment law at Stephensons
“These sobering unemployment figures underline the bleak reality facing many businesses.
“As we edge closer towards the precipice of the furlough scheme ending, it seems inevitable that the number of people out of work will continue to rise.
“Over the past few weeks we’ve seen a notable increase in businesses seeking legal guidance on the redundancy process, with many citing the end of the furlough scheme as the prompt to take action now in order to secure the viability of their business in the future.
“While the new package of support for businesses announced by the government will provide a lifeline to those industries who continue to face lockdown restrictions, it remains to be seen whether it will stem the flow of people finding themselves out of work.”
Andrew Hunter, co-founder of Adzuna
“The unemployment jump reflects a country hurting from rising redundancies and lower-than-normal hiring.
“Younger workers are in particular pain, with far fewer entry-level opportunities available than normal at this time of year and a record decrease in the number of 18-24 year olds in work.
“The figures are also distorted by a highly uneven jobs market. A handful of sectors, including Manufacturing, Logistics & Warehouse, and to a lesser extent Healthcare & Nursing, are beating the odds and hiring strongly. Our data shows Logistics & Warehouse jobs are up 77 per cent since the start of the year!
“That’s good news for workers in these areas, where new job openings are still being created. But if you remove these exceptional sectors from the overall picture, the UK jobs market looks even bleaker.
“The next few months are a critical moment, as more curfews, local lockdowns and restrictions dampen hiring and restrain the recovery in struggling sectors like Hospitality & Catering.
“It’s important that the wider jobs market rallies and employers who can do their bit to create the openings desperately needed by young people and those stuck in standstill sectors.”
Richard Baker, strategy and policy director at North East Local Enterprise Partnership (North East LEP)
“Today’s figures show that our economy remains fragile, despite a small amount of economic improvement since April.
“There has been a large increase in unemployment in the North East region between June and August, which is extremely concerning – especially as we are faced with ongoing and tightened restrictions over the coming months.
“The North East region including the North East LEP and the Tees Valley LEP areas, now has the highest unemployment rate of the English regions at 6.6 per cent and we are seeing this follow through to more people in our region claiming unemployment-related benefits.
“Our businesses continue to work hard to keep their teams together, but we are faced with a stop-start recovery, where ongoing support will be critical, for business. We welcome government’s decision to extend the support available to the economy. We will be monitoring its impact closely as we move into the winter.
“Strategic leadership and a strong partnership with government is more critical than ever – we need to ensure that restrictions, support for businesses is reflective of the need of our region.”
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