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UK Labour Market Update

Posted on 26/01/2021 by Jim Cassidy

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The UK labour market proved more resilient than expected in the three months to November as an extension of government aid helped protect jobs amid a widespread lockdown.

The nation’s unemployment rate climbed to 5 per cent in the period, the highest since 2016 but lower than the 5.1 per cent predicted by economists, the Office for National Statistics said Tuesday.

The number of people in work fell by 88,000, the least since July, while the pace of increase for job cuts slowed.

There were also signs of recovery amid a brief reopening of the economy in December, with tax data showing the number of employees on payrolls rose by more than 52,000 in the month.

Still, the total number of people who have had lost their jobs since the crisis began stood at 828,000.

The spike may have been more pronounced but for an eleventh hour extension of the government’s furlough plan, announced alongside details of November’s lockdown on October 31st.

That support, which helped protect almost 10 million jobs in 2020, has been vital to the UK labour market’s performance during the crisis, with the unemployment rate only climbing by around 1 percentage point even as the economy saw its worst recession in three centuries.

The program is now due to end in April, although people familiar with the matter said last week that chancellor of the exchequer Rishi Sunak is drawing up plans to extend aid with the nation back under a more severe set of restrictions.

Such a move may further dampen the peak of unemployment after the crisis, which the government’s fiscal watchdog last year predicted could be 7.5 per cent.

New figures on Tuesday also showed the regional impact of job losses in 2020, with London seeing the steepest percentage fall in payrolled employees, followed by northeastern Scotland. – Bloomberg