“The darkest hour is just before dawn": Business leaders react to latest ONS unemployment statistics
This morning the Office for National Statistics (ONS) reported a further rise in unemployment between July and September.
The ONS also reported that a “record number” of redundancies, as firms anticipated the end of the furlough scheme - which has now been extended until next year.
Business leaders across the country spoke to Bdaily about what the results mean for their industries, regions, and the UK economy as a whole.
Suren Thiru, head of economics at British Chambers of Commerce (BCC)
“The rise in the unemployment rate and redundancies is further evidence that the damage being done to the UK jobs market by the Coronavirus pandemic is intensifying.
“While there was a rise in the number of job vacancies, this is more likely to reflect a temporary bounce as the economy reopened before recent restrictions were reintroduced, rather than a meaningful upturn in demand for labour.
“The extension to the furlough scheme will safeguard a significant number of jobs in the near term.
“However, with firms facing another wave of severely diminished cashflow and revenue and with gaps in government support persisting, further substantial rises in unemployment remain likely in the coming months.
“Increased grant support for businesses impacted by restrictions is urgently needed to help businesses protect jobs, particularly given the delay to the job retention bonus.
“Closing the remaining gaps in government support, including for some self-employed and company directors must also be a key priority.”
Richard Baker, strategy and policy director at North East Local Enterprise Partnership (LEP)
“Today’s figures show a national surge in unemployment as employers prepared for the end of the furlough scheme. The North East region now has the highest rate of unemployment in the country which is extremely concerning – especially as this month’s data does not yet take account the impact of the current tighter restrictions.
“The unemployment figure for the North East region, including the North East LEP and the Tees Valley LEP areas, was at 6.7 per cent at the end of September, compared to 4.8 per cent nationally.
“The North East LEP area has seen the number of people claiming unemployment-related benefits increase by over 60 per cent since March. A big concern is the large rise in younger people aged 16-24 not in employment across the UK.
“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 and for jobs. We welcome government’s recent decision extend the support available to the economy and 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 support for businesses is reflective of the need of our region.”
David Morel, CEO of Tiger Recruitment
“The latest ONS labour market figures for the three months to September show a record high of redundancies and a sharp rise in unemployment as the pandemic continues to take its toll on livelihoods.
“However, there are also some positives in the data which give reason for cautious optimism. Job vacancies continued to recover in the period August to October.
“While these remain below pandemic levels and are 278,000 (34.6 per cent) less than a year ago, this is a move in the right direction and an upward trend we see reflected in our own data.
“Unlike the first lockdown in March, we have continued to receive consistent numbers of job briefs since the lockdown announcement a few weeks ago.
“Pay also continued to rise; the annual growth in both total pay (1.3 per cent) and regular pay (1.9 per cent) in July to September 2020 was above the rate of inflation. This positive news corroborates our own data which saw candidates receive an average 3 per cent pay rise in Q3 this year.
“I’m hopeful that current lockdown restrictions will be lifted on 2nd December, as planned, and that businesses can get back on an even keel.
“The news of an imminent Covid vaccine and the US election result offer more certainty to businesses which will feed in positively to the UK economy, and result in greater hiring confidence among employers.”
Laith Khalaf, financial analyst at AJ Bell
“The darkest hour is just before dawn, and with a potential coronavirus vaccine now on the table, there is light on the horizon for the labour market.
“The vaccine breakthrough will give businesses greater confidence that an end to the pandemic is in sight and will encourage them to retain staff for a bit longer. For now though, the statistics are pretty grim, and are likely to get worse before the cavalry arrives.
“The third quarter was a record-breaking period, not just in the scale of the redundancies witnessed, but in the distortions happening within the labour market. That’s clearly a sign of a system under stress as people shift their behaviour to cope with the economic shock of the pandemic.
“Redundancies hit a record high and unemployment is continuing to climb sharply. There’s also been an exodus from self-employment, with many people switching to full-time employment instead.
“Many of these have not changed jobs, but have simply switched their categorisation, presumably concerned about the level of government support for the self-employed through the pandemic.
“Young people are at the sharp end of proceedings and employment for 16 to 24 year olds now sits at a record low. As unemployment rises and people shift from self-employment, businesses can choose experienced individuals to fill their ranks, leaving younger people in the workforce out in the cold.
“The extreme pressure heaped on the hospitality sector, traditionally a common home for younger workers, can also be blamed for low levels of employment in this age group.
“There was some positive news in the form of a pick up in average earnings, driven by rises in total pay in the public sector, though it is still muted overall and negative in some sectors.
“A week ago the Bank of England predicted that unemployment will peak at 7.75 per cent in the second quarter of next year.
“No doubt economists at the central bank will already be revising that figure in light of the news of a potential vaccine, but with another national lockdown now in force in England, the economic dials will still point downwards in the coming months.
“If the vaccine can put life back on a more normal footing next year, the question will be just how big a scar the pandemic has left on the UK economy.”
Niamh Corcoran, policy adviser, North East England Chamber of Commerce
“The labour market figures published today are very concerning for the North East, with the region continuing to have the highest unemployment rate in the UK.
“The region’s unemployment rate stands at 6.7 per cent compared to the national figure of 4.8 per cent. Although the national figures indicate that vacancies are up and more people are actively looking for work, these figures mainly pre-date the implementation of further restrictions in the region which masks the true picture.
“Despite hopes for a vaccine in the coming year, we are unlikely to emerge from this crisis unscathed. The pandemic is causing sharply rising rates of joblessness, as well as accelerating longer-term economic shifts which could leave some job roles obsolete after the pandemic.
“With the UK in another lockdown, the extension of the furlough scheme is a welcome move from [the] government. However, the government must also look ahead and act now to support people who have lost their jobs back into work or even new sectors of the economy.
“We need to see long-overdue investment in the adult skills system in the form of a comprehensive upskilling and reskilling strategy to help people into sustainable jobs.”
Tom Pickersgill, CEO and co-founder of Orka
“A second wave of Covid redundancies brings us close to a million jobs lost since March. Now with the whole country locked down again, it’s difficult to see how this trend won’t continue into the new year.
“For new job seekers, however, there are some routes back into employment. While several industries have been hit incredibly hard by the pandemic, others including delivery services, supermarkets, cleaning and logistics are growing and work is in high demand.”
“Industries such as these will be seeking contingent labour in the coming months, offering a potential lifeline for anyone who is suddenly out of work and looking to land a new source of income quickly.
“This kind of temporary work is also a good option for anyone who has just been furloughed and is keen to top up their earnings to ensure they can meet all of their financial commitments.”
Simon Lyle, UK managing director of Randstad Risesmart
“At first look, the stats appear shocking. But this is just the start - headline unemployment rates are still relatively low.
“The jobless rate is bound to rise much further, even given some potential mitigating impact from a vaccine that may start to be distributed from December - probably Q1 next year; that is light years of time when it comes to businesses’ economic viability after they have been hit for so long, so hard.
“The government is fighting a losing battle against economic reality with programmes like the jobs support scheme and furlough. The jobs market can’t go on indefinitely like this. The country needs an exit plan.
“That will involve investing more heavily in reskilling programmes to ready people for a new-look labour market. The government should take a leaf out of the private sector’s book and help people whose jobs are not viable to maximise their chances of getting new work.
“That requires a sophisticated approach involving the application of career coaching, job search support, smart job matching technology, and advice on relevant reskilling and upskilling needed.”
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