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UK unemployment rate continues to surge

The UK’s unemployment rate rose to 4.8% in the three months to September, up from 4.5%, as coronavirus continued to hit the jobs market.

Redundancies rose to a record high of 314,000 in the same period, the Office for National Statistics (ONS) said.

Firms made more workers redundant in anticipation of the end of the furlough scheme, which was originally supposed to finish at the end of October.

It has now been extended until the end of March.

Analysts said the extension had come “too late in the day” to save some jobs and further big rises in unemployment were likely in the coming months.

Unemployment
Pic Courtesy- BBC

How many are affected and which age group is faring worst?

The number of people out of work rose by 243,000 in the three-month period, the largest increase since May 2009.

The redundancy figure was higher, however, because it included people who may have lost their jobs and then retired or decided to stop looking for work.

The ONS figures also showed there was a big rise in the number of 16 to 24-year-olds out of work.

The unemployment rate among young people is far higher than the overall rate.

Age comparison
Pic Courtesy- BBC

What about the bigger picture?

ONS deputy national statistician for economic statistics Jonathan Athow told the BBC: “We’re seeing a continuation of a weakening of the labour market, fewer people on the payrolls and fewer people employed overall. That is now passing through to increasing unemployment altogether.”

He said the UK was starting to see people fall out of work in quite large numbers. However, there were still about 2.5 million people on furlough, with “quite a lot of uncertainty” about what would happen to them.

“We might see furlough creep up again and that might mean we don’t see any further big increases in redundancies or unemployment, but it’s way too early to tell what will happen,” he added.

Mr Athow said vacancies continued to recover from the very low numbers seen earlier in the year, but those figures predated the reintroduction of lockdown restrictions in many parts of the UK.

What do unemployed people say?

Justin Miller

Justin Miller was made redundant as a lifeguard in July. He is a graduate who has applied for more than 100 jobs, but has not once been invited to an interview.

“I’ve been looking for opportunities, but I just haven’t had any luck with anything I’ve been doing,” he told the BBC.

“There’s a lot of jobs out there locally with local shops, but I’ve been competing against other people that could have been made redundant with 10, 20 years’ experience, so I’ve got no chance of getting those jobs.

“Most of the time I’m not even hearing anything back. It’s just been really difficult,” he says.

“It definitely plays on your mental health. There’s a lot of thoughts that go on in your head because you’ve had so much rejection.

“It’s a question of keeping myself motivated and not letting it get me down too much.”

How do you improve your chances of finding work?

from Claire Valoti, VP International at Snap Inc

If you keep getting rejection emails, ask them why, says Claire Valoti, a boss at social media company Snap.

“Not everyone is going to give you feedback, but some will. The important thing is to figure out what’s not working and how you can better sell yourself.”

“Be bold,” she says. Ask a recruiter or someone in your industry, since job applications and interviews are things at which you can improve, she recommends.

Redundancies chart
Pic Courtesy- BBC

What are economists saying?

Tej Parikh, chief economist at the Institute of Directors, said the pandemic continued to bring “turbulence” to the UK jobs market.

“The extension of the furlough scheme through to March is welcome as it has given directors certainty to plan ahead for their staff. Unfortunately, the change appears to have come too late in the day for some.”

Suren Thiru, head of economics at the British Chambers of Commerce, said: “While there was a rise in the number of job vacancies, this is more likely to reflect a temporary bounce as the economy reopened before recent restrictions were reintroduced, rather than a meaningful upturn in demand for labour.

He said the extension to the furlough scheme would safeguard a significant number of jobs in the short term.

“However, with firms facing another wave of severely diminished cashflow and revenue and with gaps in government support persisting, further substantial rises in unemployment remain likely in the coming months.”

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How bad is this compared with previous downturns?

Given the scale of the economic shock we’ve been through, the impact of the pandemic on the official unemployment rate remains mild. A level of 4.8%, encompassing 1.62 million people, is low by historic standards. And current predictions that unemployment will peak at 7-8% also look modest, given the fact that we’re now in an economic double-dip of unprecedented proportions.

That won’t be any consolation to the record 314,000 people made redundant from July to September. Fully informed by scientists about the risks of a second wave, Chancellor Rishi Sunak spent four months telling the nation he was against extending the furlough scheme beyond October (“I cannot save every business. I cannot save every job”).

Indeed, the chancellor said in his winter economy plan in September it was “fundamentally wrong” to hold people in jobs that only exist inside the furlough and only changed his mind with hours to go. There can be no doubt that a large chunk of those people made redundant would still be in work, had their employers known the government would throw its policy into reverse at the last minute.

But with 2.5 million workers still reliant on furlough (according to the ONS), there are many more who can be glad the government executed that U-turn.

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What has the political reaction been?

Chancellor Rishi Sunak said the figures underlined “the scale of the challenge” that the country was facing.

“I know that this is a tough time for those who have sadly already lost their jobs, and I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected and protect the lives and livelihoods of people across this country,” he added.

The government had extended the furlough scheme to protect jobs and launched the £2bn Kickstart programme to help young people, he said.

Shadow work and pensions secretary Jonathan Reynolds said people had lost their livelihoods because of the government’s “failure to face up to the scale of this jobs crisis in time”.

“We’ve had enough last-minute changes and bluster from this government,” he added.

The chancellor needs to urgently provide support to those who have lost their jobs and get Britain back to work – including through a green recovery to help create hundreds of thousands of low-carbon jobs.”

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Business UK

Sainsbury’s to cut 3,500 jobs and close 420 Argos stores

Sainsbury’s is to cut 3,500 jobs with the closure of 420 Argos outlets and all its meat, fish and deli counters.

The 420 standalone Argos stores will close by March 2024, although Sainsbury’s said it would open 150 Argos outlets in its supermarkets.

Boss Simon Roberts said Sainsbury’s was responding to changing consumer habits and the growth of online shopping.

He said the counter closures was a response to lower customer demand and a desire to reduce food waste.

The supermarket also reported half-year results, revealing a £137m loss which it blamed on closures and “market changes”.

It comes on the day England enters a second lockdown, which Sainsbury’s said would continue to accelerate “a number of shifts in our industry” as it expands its online and digital operations.

Sainsbury’s, which bought Argos in 2016, said in its statement that the 120 standalone Argos stores that had not reopened since they were closed in March would now shut permanently.

By the end of the restructuring programme, Sainsbury’s said it expected the total number of standalone Argos outlets to be about 100. The restructuring will save about £600m by 2024, the grocer said.

In addition to the 150 Argos stores it plans to open in its supermarkets by 2024, it also plans a further 150-200 collection points.

Rising jobs toll

“We are talking to colleagues today about where the changes we are announcing in Argos standalone stores and food counters impact their roles,” said Simon Roberts, Sainsbury’s chief executive.

“We will work really hard to find alternative roles for as many of these colleagues as possible and expect to be able to offer alternative roles for the majority of impacted colleagues.”

He said the aim was to make Argos “a simpler, more efficient and more profitable business”. Products from the Habitat brand will also be more widely available in the stores and via Argos.

“Our other brands – Argos, Habitat, Tu, Nectar and Sainsbury’s Bank – must deliver for their customers and for our shareholders in their own right,” he said.

Despite the cutting of the 3,500 roles, the supermarket expects that it will have created about 6,000 net new jobs by the end of the year.

sainsburys delivery van
Sainsbury’s said it was responding to changing consumer demands

However, the redundancies increase the mounting jobs toll announced by companies facing a coronavirus hit to trading.

On Wednesday, John Lewis and Lloyds Banking Group said they were cutting a combined 2,500 jobs.

More than 200,000 potential job losses have been announced across sectors including banking, hospitality, travel and retail since the start of Covid-19 pandemic in March. Thousands more workers remain on furlough.

Despite Sainsbury’s cost-cutting, the company said on Thursday it would pay out a special dividend of 7.3p to shareholders after strong sales in the face of Covid-19.

Sainsbury’s revealed that total like-for-like sales increased by 6.9% for the 28 weeks to 19 September, helped by an 8.2% growth in groceries. The supermarket also said there had been “stronger-than-expected sales, particularly at Argos”.

Online sales more than doubled, jumping 117% to £5.8bn, as demand for online deliveries surged.