More than half a million to lose jobs before Christmas, warns IES
By Dawn Gibson
There could be at least 600,000 lay-offs by December as the UK grapples with the biggest wave of redundancies in more than a decade, the Institute for Employment Studies predicts.
Unemployment rose to 4.5% in the three months to August, up from 4.1% in the previous quarter, figures released yesterday by the Office for National Statistics reveal. However, this represents the tip of the iceberg, and the true picture will not emerge until the furlough scheme ends on October 31.
IES director Tony Wilson says redundancies are growing at their fastest ever rate, doubling in the last three months alone, and the latest figures confirm that redundancies will peak higher in this recession than they did in the last financial crisis.
“We’re forecasting that there’ll be at least 600,000 lay-offs by the end of year,” Wilson says. “The official measure of employment has fallen by nearly half a million since the pandemic began, which is the fastest fall in employment since 2009. With coronavirus infections now rising strongly again it feels unlikely that we’ll start to see much growth in employment and hiring in the coming months.”
The rise in vacancies is one positive sign, providing the government can work with industry to reskill and upskill workers for growing areas of the labour market.
After a record low of 343,000 vacancies in the quarter to June, there was an estimated record quarterly increase of 144,000 to 488,000 vacancies from July to September.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, says the increasing vacancies emphasise that jobs are being created. “The situation is already very different to the period covered by the ONS – we’ve counted 1.2 million job ads across the UK right now,” he says.
“Making sure we support demand in the economy and people unable to work should be our priority. This means supporting temporary workers affected by local lockdowns and looking at how to support all the businesses in the affected supply chains.”
Reed chairman James Reed says the latest figures, combined with the introduction of further local lockdowns, suggest that the Bank of England’s forecasted unemployment rate of 7.5% by October 31 is still a real possibility.
While he welcomed the government’s new Jobs Support Scheme (JSS) and the Job Entry Targeted Support Scheme (JETS), more needs to be done. “The JSS’s offer to pay 67% of workers’ wages at firms shut due to Covid-19 is a vital line of support to businesses,” Reed says. “But the scheme will need to be improved before its launch in November if is to provide more flexibility and be more generous to those most in need.
“The £238 million JETS scheme will help jobseekers who’ve been out of work for three months or more, with CV assistance, interview coaching, and, importantly, advice on how to reskill. Reskilling will be vital to the UK’s economic recovery from Covid-19, because, despite the doom and gloom in the news, new job opportunities are starting to emerge. Over 160,000 new jobs were added onto reed.co.uk last month – a 28% month-on-month increase – with roles significantly increasing in the accountancy, education, and health and medicine sectors. Reskilling will open the door to opportunities for jobseekers in growing sectors and prevent a more widespread unemployment crisis.”
The Institute for Public Policy Research (IPPR) is also calling for a revamp of support measures set to replace the furlough.
The think tank estimates that as many as 1.8 million viable jobs, which could otherwise be preserved, will be lost. IPPR argues that the government’s Job Retention Bonus and Job Support Scheme do not make it sufficiently profitable for firms to preserve viable jobs, with the key flaw being that only about one in ten workers currently on furlough are set to benefit.
The IPPR urges the government to convert the one-off Job Retention Bonus into a monthly payment proportional to wages for hours worked part-time (up to a ceiling of £2,500), and applying it only to firms that qualify for the JSS.
Savings generated could be used to increase government contributions to non-worked hours under the JSS from 33% to 43%, reducing the employer contribution by the same amount. The IPPR estimates the cost would be £7.4 billion, slightly less than the money set aside for the Job Retention Bonus (£7.5 billion).
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