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UK unemployment rate hits 5%

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The UK’s unemployment rate has risen to 5% in the three months to November, up from 4.9%, as coronavirus continued to hit the jobs market.

Some 1.72 million were out of work, the Office for National Statistics said, the highest level in five years.

That was 418,000 more than in the same period the previous year, the biggest increase since late 2009.

The hospitality industry was worst hit by the rise in joblessness, followed by manufacturing.

In both sectors, the number of people unemployed was up by more than 50,000 on the previous year.

ONS deputy chief executive Sam Beckett told the BBC that the UK had not seen such rises in unemployment since the global financial crisis.

“Payroll numbers show the number of workers on payroll have fallen by over 828,000 since the pandemic began,” she added.

Employment was still at “relatively high levels” compared to other countries, Ms Beckett said, but workers aged 16 to 24 were suffering some of the biggest falls in employment.

However, she added: “We’ve currently got over 4.5 million people on the furlough scheme, so that does complicate the picture when you’re trying to interpret what’s going on in the labour market.”

While the main rate of unemployment has reached 5% for the first time in nearly five years, and this morning’s numbers saw the largest increase in the numbers unemployed since the great financial crisis, the chancellor must now be tempted to extend the furlough scheme to co-ordinate with the rollout of the post-vaccination reopening of the economy.

There are some bad numbers in this release, as would be expected from the pandemic restrictions, but they were expected to be a little worse. In the quarter to November, there were 418,000 extra unemployed over the same period in 2019 – the sharpest annual rise since the 2009 financial crisis.

The rate of redundancies reached a record of 14 per 1,000 people. Loss of jobs was concentrated in sectors such as retail and hospitality, most affected by social restrictions, which were reintroduced at the end of the period. Young people also faced the sharpest drops in employment. The jobs numbers are yet to reflect the current return to national lockdowns.

Though a significant rise over the past few pandemic-afflicted months, unemployment at 5% is still low by international standards and is being kept in check by the government’s job retention furlough scheme. The current plan is to end the costly scheme in April, which economists expect would see a sharp jump in jobless figures to 6% or 7%.

But as the government continues to communicate caution about how fast restrictions on the economy will be lifted, business groups are adamant that the scheme needs to be extended into the early summer, or at least linked to the success of the vaccination program.

Redundancies rose to a record high of 14.2 per 1,000 people.

The redundancy rate was highest for those aged 25 to 34 years, the ONS said.

However, job vacancies also rose, with 81,000 new openings reported in the three months.

“This crisis has gone on far longer than any of us hoped – and every job lost as a result is a tragedy,” said Chancellor Rishi Sunak.

“Whilst the NHS is working hard to protect people with the vaccine, we’re throwing everything we’ve got at supporting businesses, individuals and families.

“Our Plan for Jobs includes grants and loans so that firms can keep employees on, the furlough scheme to help protect jobs, and programmes like Kickstart alongside record investment in skills so that people can find their first job, their next job or a new job if needed.”

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