October 31, 2020

Coronavirus pandemic sparks biggest surge in unemployment in a DECADE

Coronavirus pandemic sparks biggest surge in unemployment in a DECADE

THE coronavirus pandemic has sparked the biggest surge in UK unemployment in more than a decade.

Official figures show a 138,000 rise between June and August — the largest since 2009.

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The unemployment rate reached 4.5% in September

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The unemployment rate reached 4.5% in September

It took the jobless total to a three-year high of 1.52million.

The rate of unemployment rose to 4.5 per cent — from 4.1 per cent in the previous three months, The Office for National Statistics revealed.

The number of workers who’ve lost jobs since March hit 673,000, but vacancies are up in September.

The number of redundancies also continued to increase over the period, up by 113,000 in June to August compared to the same time last year, and up by a record 114,000 on the quarter, to 227,000. 

This is the largest annual increase since April to June 2009, with the number of redundancies reaching its highest level since May to July 2009.

It comes as the government’s furlough scheme protecting jobs and wages is due to come to an end this month, with many bosses making workers redundant in anticipation.

What are my redundancy rights?

BEFORE making you unemployed, your employer should still carry out a fair redundancy process.

You are entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you’ve been working somewhere for at least two years.

How much you’re entitled to depends on your age and length of service, although this is capped at 20 years. You’ll get:

  • Half a week’s pay for each full year you were under 22,
  • One week’s pay for each full year you were 22 or older, but under 41,
  • One and half week’s pay for each full year you were 41 or older.

Sadly, you won’t be entitled to a payout if you’ve been working for your employer for fewer than two years.

There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.

You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.

Some employers have also struggled to take on increasing furlough costs with bosses having to pay national insurance and pension contributions from August, 10% of wages from September and 20% of salaries from October.

Meanwhile, those claiming work-related benefits – both those working on a low income or low hours and those who are not working – reached 2.73million in September, up from 2.7million in August.

Jonathan Athow, deputy national statistician at the ONS, said: “Since the start of the pandemic there has been a sharp increase in those out of work and job hunting but more people telling us they are not actively looking for work.

“There has also been a stark rise in the number of people who have recently been made redundant.”

Signs of recovery

But despite a rise in unemployment over a quarterly basis, on a monthly basis the number of staff on payroll is up by 20,000 in September compared to August, the ONS said.

Estimates for June to August 2020 show 32.59million people aged 16 years and over in employment, although that’s still 102,000 fewer than a year earlier and 153,000 fewer than the previous quarter.

Vacancies also showed signs of a recovery, from a record low of 343,000 in April to June, to an estimated record quarterly increase of 144,000 to 488,000 vacancies in July to September.

But they still remain below the pre-coronavirus pandemic levels and are 332,000 (40.5%) less than a year ago.

What is furlough?

THE aim of the government’s job retention scheme is to save one million workers from becoming unemployed due to the coronavirus crisis.

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Under the scheme, furloughed workers receive 80% of their wages, up to £2,500 a month, if they can’t work because of the impact of coronavirus.

One of the main benefits of the scheme is that it allows workers to be kept on the payroll rather than being laid off.

Furlough is available to all employees that started a PAYE payroll scheme on or before March 19, 2020, although it closed to new entrants in June.

The scheme has been extended to run until October 31, 2020, and can be backdated to March 1, 2020.

Previous rules meant that staff couldn’t undertake any work for their employers while on furlough.

But from July 1, staff members were allowed to go back part-time and they must be paid in full for the hours that they work.

From September 1, employers will have to start contributing 10% of wages, with the government paying the remaining 70%.

And from October 1, employers need to foot 20% of the bill, with the government making up the remaining 60%.

The government also paid the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on top, although employers started paying these costs from August 1.

Annual growth in employee pay excluding bonuses returned between June and August and was seen at a rate of 0.8% as employees continued to return to work from furlough. Pay, including bonuses, remained unchanged at 0%.

Wages had been falling in the months since April when growth was affected by lower pay for furloughed employees, who get 80% of their salaries up to £30,000 a year, and reduced bonuses.

Unemployment ‘to rise’ when furlough ends

Experts, however, predict unemployment figures will rise when furlough ends this month.

Jeremy Thomson-Cook, chief economist at currency firm Equals Money said: “The wider unemployment rate has ticked higher but remains heavily sedated by the furlough scheme and we expect a push towards the 9% level – a doubling of current unemployment levels – in the coming six to 12 months.”

Laith Khalaf, financial analyst at financial provider AJ Bell added: “Looking forward things look set to get worse before they get better for the UK economy, as furlough expires and greater social restrictions are enforced.”

To try to combat this, an extension to the job support scheme has been unveiled by chancellor Rishi Sunak, which will see the government pay a third of hours not worked up to a cap of £697.92 a month for businesses facing lower demand over winter.

Employers will pay for the hours worked, plus contribute towards a third of the hours not worked.

For businesses forced to completely close due to local lockdowns, the government will pay two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.

Employers will only have to cover national insurance and pension contributions.

Both schemes launch on November 1 and will run for six months.

Minister for employment Mims Davies MP said: “We know the virus has impacted our jobs market in recent months and that’s why our £30billion Plan for Jobs will continue to help protect, support and create jobs.”

Rishi Sunak announces new Job Support Scheme paying two thirds of wages