UK employers made record numbers of redundancies in the third quarter, but economists say they see signs the labour market could be about to turn the corner.
Redundancies hit a record high of 314,000 in the three months to the end of September, up 181,000 on the previous quarter, data from the Office for National Statistics (ONS) showed.
Unemployment rose 0.7% from the previous quarter, an increase of 243,000, which takes the total of unemployed people in the UK to 1.6 million.
Young people have been hit hard by the crisis with a fall of employment of 174,000 over the quarter for 16-24-year-olds to a record low of 3.52 million.
“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,” said Laith Khalaf, financial analyst at investment platform AJ Bell.
“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,” he added.
England went back into national lockdown on 5 November as coronavirus cases surged across the country.
Chancellor Rishi Sunak announced this month that the furlough scheme would be extended until March. The scheme pays 80% of staff wages up to £2,500 per month. It was originally slated to end in October.
Hannah Audino, an economist at PwC, said that despite the bad news there were some “tentative positive signs emerging” in the employment market.
“Importantly, the number of people who are economically inactive has stabilised despite job losses, which suggests that the gradual relaxation of social distancing measures and the opening of schools has encouraged workers to seek employment,” she said.
“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,” Khalaf added.
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