COVID-19 Pushes UK Unemployment Figures to 4.1%

The latest unemployment figures from the Office for National Statistics (ONS) show that unemployment has risen to 4.1 per cent for the quarter ending in July.

The rate for the previous quarter was 3.9 per cent.

But the news is not as bad as it appears to be, as 4.1 per cent is actually quite low by historic standards, and the employment rate has increased slightly to 76.5 per cent while the economic inactivity rate has fallen, according to the ONS.

And in August, some 2.7 million people claimed jobless benefits for the month, an increase of 121 per cent since the lockdown in March. The ONS said that some 695,000 employees have been left jobless since the lockdown started.

“With the number of employees on the payroll down again in August and both unemployment and redundancies sharply up in July, it is clear that coronavirus is still having a big impact on the world of work,” ONS director of economic statistics Darren Morgan said on Tuesday.

Younger workers (those aged 18 to 24 years) had the largest decrease in employment and the largest increase in unemployment. They also had the second-largest increase in economic inactivity after workers aged 65 years and over. The ONS said the increase in youth unemployment is linked to younger workers’ tendency to work in industries that were worst affected by the pandemic, that is, accommodation and food service activities and arts, entertainment and recreation. It noted that in addition, quarantine rules for international travellers to the UK have affected the flow of tourists, which may slow the recovery of the industries worst affected by the pandemic.

Looking ahead, the situation looks bleak according to several analysts, especially as the government is set to discontinue its furlough scheme next month. That scheme has seen government rather than the employer paying the majority of wages for almost 10 million employees.”Employment will fall more sharply and unemployment will increase more quickly as the furlough scheme continues to unwind and ceases at the end of October,” Paul Dales, chief UK economist at Capital Economics research group, said.

The retail, hospitality and lesiure sectors have been perhaps the hardest hit, but there has been some recovery in the food retail sector with several companies increasing employment as demand for online sales has increased.

In fact, the ONS said the retail sector was characterised by a changing structure of sales, shifting more in favour of online sales that in July were 50.4 per cent higher than the pre-pandemic levels in February 2020 and accounted for 28.9 per cent of retail spending