"The potential for further economic pain is very real": Businesses react to latest ONS labour market figures
This morning the Office for National Statistics (ONS) has published its latest UK labour market figures.
The unemployment rate across the UK has risen to 4.9 per cent in October, up from 4.8 per cent the previous month.
Since February 2020, the number of payroll employees in the UK has fallen by 819,000.
Business leaders across the country have reacted to the latest figures and shared their thoughts with Bdaily.
Richard Baker, strategy and policy director at North East Local Enterprise Partnership (North East LEP)
“Today’s figures show a large increase in the national unemployment rate to the end of October which is severely impacting the North East.
“The unemployment figure for the North East region, including the North East LEP and the Tees Valley LEP areas, was at 6.6 per cent during the three months of August to October, compared to 4.9 per cent nationally.
“The North East LEP area has seen the number of people claiming unemployment-related benefits increase by almost 33,000 since March. Unemployment in the North East region has increased among all age groups, but we have a particular concern about the large rise among 18 to 24-year-olds.
“These statistics reflect the period in the run-up to the end of the original furlough scheme when employers were facing tough choices in an uncertain environment. The decision to extend the scheme will protect many jobs over the winter.
“However, putting today’s figures alongside other data and intelligence about the impact of current restrictions and uncertainties about our future relationship with the European Union, we are likely to face further challenging data in future months.
“It is essential that Government continues to support the economy until controls can be released and that we finalise a deal with the European Union.”
Samantha Windett, director of policy at Impetus and co-chair of the Youth Employment Group
“With redundancies in the three months to October reaching a new high of 370,000, young people continue to bear the brunt of the economic fallout of the coronavirus pandemic.
“60 per cent of the total fall in employment in the last quarter was amongst 16 - 24 year olds. Already 2.5 times more likely to work in sectors worst impacted by lockdowns, the economic effect on young people will be exacerbated by the tier 3 restrictions affecting large parts of the country.
“Lack of government support during this time means those not in full-time education or employment has risen above 1 million, back to lockdown levels. It will be months before the benefits of the vaccine rollout are felt, restrictions are lifted, confidence is restored and the jobs market is rekindled.
“We know that any period out of work can have a scarring effect on young people’s long-term job prospects and, as we move into a very difficult new year, we need to deliver on the Prime Minister’s Youth Opportunity Guarantee so more young people aren’t let down.”
John Whelan, CEO of quantum employment design company My Digital
“This year we’ve seen redundancy rates and unemployment levels hit a record high, with numbers we have not seen since the Thatcher era.
“With 2.5 million people still on furlough, the ‘real’ unemployment number is only going to increase to unprecedented levels. By the end of March 2021, we will see the full scope of damage to the labour market.
“It’s unlikely permanent employment will return for many businesses. Instead, the quantum workforce is set to welcome many more workers as they look to support themselves by sharing their skills across a range of employers.
“Companies will want to ensure they are able to react quickly to any future lockdown or centrally imposed policy that restricts their ability to trade.
“They will have learned the importance of being able to flex labour up and down quickly with demand. As seen with Just Eat’s new agency worker model for couriers, which will bring much-needed jobs for the quantum workforce. “
Tom Pickersgill, CEO and co-founder of Orka Technology Group
“The vaccine breakthrough will also be a shot in the arm for the employment sector and hopefully it will give businesses with furlough still in place the confidence to retain staff.
“For now however, the statistics paint a stark picture and unemployment is still likely to spike when the scheme finally comes to an end.”
“One silver lining this year has been the shift from firms towards more flexible working practices. This is a great way of transitioning people back into work as the economy recovers from the impact of the pandemic – offering respite to those who find themselves out of work and looking for a source of income.
“This pandemic has brought a great deal of pain and worry, but it has also provided opportunity for individuals and businesses to slow down and assess where they could be doing things better.”
Jonathan Walker, director of policy at North East England Chamber of Commerce
“This morning’s statistics provide further evidence of the continued disproportionate impact of Covid and the economic crisis on our region. We have the highest unemployment rate in the country and have also seen the largest fall in employment.
“With our region currently in the top tier of Covid restrictions and the risk of a disastrous no-deal Brexit on the horizon, the potential for further economic pain is very real.
“While we look to 2021 with some hope of an improvement in fortunes later in the year, we need to see real large-scale action by Government. It must make good on its ‘levelling up’ promises to start to undo the damage done to the North East economy.
“This starts by getting a trade deal with the EU, providing a pathway for our businesses out of Tier 3 and continuing to change Government thinking to support investment in our region.”
Laith Khalaf, financial analyst at AJ Bell
“There’s no flattening in the curve of redundancies at the moment, despite the last minute extension of the furlough scheme.
“The latest data provides a picture of activity in the labour market before an effective vaccine was announced and that news in itself may serve to save some jobs, as it gives businesses a bit of light at the end of the tunnel.
“However, the outlook is still for rising unemployment and London’s move into a Tier 3 zone further undermines business and job security and highlights how the economy is still vulnerable to the ebb and flow of the pandemic.
“The OBR expects unemployment to peak at 7.5 per cent in the second quarter next year, which unfortunately means significantly more job losses in the next few months.
“The ONS data did show that pay growth was above the rate of inflation, but that figure is likely artificially boosted by the furlough scheme. You also have to be paid to benefit from pay growth, so that rise is cold comfort to those who have lost their jobs throughout the crisis.
“This really underlines the divisive nature of the pandemic. On the one hand record numbers of people are losing their jobs, on the other hand those unaffected have been able to squirrel away around £150bn into cash savings this year.
“But even those who have maintained their jobs and income through the pandemic will be impacted by the scars it leaves on the economy and they may well find themselves on the sharp end of the government’s efforts to rebalance its books.”
Dylan Buckley, co-founder of DirectlyApply
“We have seen the biggest year-on-year decline in job vacancies in the retail and hospitality sectors. Vacancies have fallen by 49 per cent and 52 per cent respectively, and we only expect this to get worse as the new tier-three restrictions in London and parts of the southeast come into force.
“Traditionally this is the busiest time of the year for hiring in these sectors. We anticipate the changes in the hospitality sector in particular in the New Year to be seismic: up to 150,000 jobs could be lost in London alone.
“Retail could be hit just as hard if we do not strike a Brexit deal. Without one the effects of Covid will be compounded.”
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