Facing a "cliff edge": UK business leaders react to highest level of unemployment in 5 years

New statistics published today have shown that UK unemployment rose last year to the highest level in five years.

Figures from the Office for National Statistics (ONS) show that unemployment went up to 5 per cent in the three months up to November 2020.

The data also showed that workers aged 25 to 34 faced the biggest risk of losing their jobs with a redundancy rate of 16.2 per 1,000 - a fivefold increase on the same period a year earlier.

Business leaders across the country have reacted to the new figures and what it means for their regions.

Richard Baker, strategy and policy director at North East Local Enterprise Partnership (LEP)

“Today’s figures continue to demonstrate the impact of COVID-19 on our economy with a continuing decrease in employment and a rise in the number of people claiming unemployment related benefits.

“The decision to extend the furlough scheme will protect many jobs for the future. However, it remains an uncertain time for businesses as a result of Covid controls and the need to continue to adapt to new processes following the Trade Deal with the European Union.

“It is essential that government continues to support the economy through the pandemic and invests to support the proposals in our COVID-19 Recovery Plan to enable us to drive forward our region’s recovery.

“The data released today covers the three-month period to November 2020. Employment continued to decrease during this time, both nationally and in the North East. The employment rate for the North East region, including the North East LEP and the Tees Valley LEP areas, was the lowest in England at 71.2 per cent.

“Both the unemployment rate and the number of working age people outside the labour market were much higher than they were between March and May 2020. The number of people being made redundant was at its highest level since 2009.

“In the North East LEP area, the number of people claiming unemployment-related benefits has increased by over 31,000 since March, with rates at 10 per cent in some areas. Employment in the region has fallen in most age groups, but the largest impact appears to have been on those aged under 25 and among 50 to 64-year-olds.

“These statistics include the November lockdown period but do not include the impact of the restrictions since Christmas.

“Strategic leadership and a strong partnership with government is more critical than ever – we will work closely with government to ensure that support for businesses is reflective of the need of our region.”

Samantha Windett, director of policy at Impetus and co-chair of the Youth Employment Group

“The fall in employment for young people since the start of the crisis is larger than any other group. The latest labour market statistics show there are 250,000 fewer 16–24-year-olds in employment than before the start of the pandemic and unemployment levels remain high.

“Already 2.5 times more likely to work in sectors worst impacted by previous lockdowns, the economic effect on young people has only been exacerbated by the continuing disruptions. It’s clear that young people urgently need support.

“In June, the Prime Minister announced an Opportunity Guarantee for every young person. Amid an ever-worsening youth employment crisis, we need government action to deliver on that promise.

“No young person should spend more than six months unemployed before accessing a meaningful education, training or employment opportunity.

“The latest numbers on the Kickstart Scheme show that many employers have had no choice but to delay their placements given the continuing disruption of lockdowns.

“Kickstart must be extended past December this year to give all employers engaged in the scheme the time they need to fulfil their plans and offer thousands more young people the opportunity of employment.”

John Whelan, former HMRC advisor and CEO of MyDigital

“Last month, Boris announced tighter tier restrictions, extended the furlough scheme and actioned another national lockdown. By delaying the economic recovery once again, we now face a difficult period ahead as unemployment rates continue to hit record highs and the rate of employment continues to fall.

“With over 4.5 million people still being supported by the furlough scheme, only time will tell if it gives us a ‘soft landing’ and turns an economic crash into a gentle descent.

“Unemployment figures will indicate whether the furlough spend of £46 billion was a worthwhile investment or whether it simply ‘kicked the employment can down the road’ for businesses and employees alike.

“This month, the labour market has seen an 11 per cent rise in the number of temporary workers who could not find a permanent job in the UK. It is clear that the uncertainty and inflexibility of permanent employment is taking its toll and skilled workers are turning to temporary employment to work with their lifestyle.

“The Quantum Workforce will continue to welcome millions of skilled workers looking to provide their expertise across employers in a way that is specific, manageable and works for all.”

Niamh Corcoran, policy adviser at North East England Chamber of Commerce

“The employment statistics continue to show the impact the Coronavirus pandemic is having on the North East’s labour market. The region’s unemployment rate stands at 6.4 per cent, significantly higher than the UK’s rate of 5 per cent.

“Whilst the rollout of the vaccine offers a glimmer of hope, we remain firmly in the second wave of the pandemic.

“With many businesses in the hardest hit sectors having been closed since November, the long-term impacts of the second wave of this crisis will be acute. The North East went into this crisis with high levels of existing unemployment, leading the region to be disproportionately vulnerable to any national rise in joblessness.

“The government’s Job Retention Scheme, while acting as a lifeline for businesses, is buffering the impacts of heightened restrictions on the local labour market. With no end to restrictions in sight, government must urgently extend the Job Retention Scheme beyond March.

“Not only this, but the Chancellor should grasp the opportunity the forthcoming Budget offers and outline stronger business support to help employers retain staff and a comprehensive retraining strategy, in order to minimise the impact of unemployment.”

Philip Richardson, partner and head of employment law at Stephensons

“These latest unemployment figures are a significant concern and reinforce the view that younger people and those just beginning their careers have been hardest hit.

“As the pandemic continues to cause a huge amount of business uncertainty, it is clear that the government must look again at the job support scheme and the options open to those most at risk of redundancy.

“Without targeted intervention, businesses and thousands of employees face a cliff edge when the furlough scheme finishes at the end of April. Only then will we start to see a clearer picture of the toll this pandemic has taken on Britain’s workforce.”