• Redundancies reached a record high of 314,000 in the three months to September 2020
• Unemployment rose to 4.8%, up 0.7% from the previous reading
• Employment dropped 174,000 over the quarter for 16-24 year olds, to a record low of 3.52 million
• There was a 174,000 fall in self-employment, to 4.53 million, with a record 99,000 decrease for women in Q3 2020 compared to Q2
• The number of full-time employees actually grew during the quarter, up by 113,000 to a record high of 21.17 million, driven by a 165,000 increase in female full-time employees
• A record number of people, 277,000, switched from self-employment to employment in Q3 2020
• Regular pay grew by 1.9% in the three months to September 2020, up from the previous reading of 0.9%
Laith Khalaf, financial analyst at AJ Bell, comments on the latest ONS labour market statistics:
“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% 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.”
