Labour has called on the government to “adopt a more flexible approach” or risk unemployment skyrocketing after new figures showed that almost 700,000 jobs have been lost since the UK went into lockdown in March.
The latest estimates published by the Office for National Statistics (ONS) this morning reveal that the number of employees on company payrolls fell by 695,000 between March and August this year.
The number claiming unemployment-related benefits, which includes those with no work or those with few hours and low pay, also rose in August to 2.7 million – a 121% increase on March.
The ONS also reported today that Britain’s unemployment rate has risen to 4.1% – or roughly five million people – in July as the total number of those without jobs rose by 62,000 compared to June.
The Labour Party has warned that more job losses are on the horizon if the government does not consider targeted support for sectors that have been hard-hit by the coronavirus pandemic.
Commenting on the figures today, Shadow Work and Pensions Secretary Jonathan Reynolds said: “These new figures are deeply concerning, over five million people are not working and 2.5 million have been out of work for three months or more.
“Unemployment will continue to rise unless the government acts now and adopts a more flexible approach targeted at the sectors that need it most.”
General secretary Frances O’Grady told the TUC Congress on Monday that Tory Chancellor Rishi Sunak needs to extend the furlough scheme or risk a further “tsunami of job losses“.
Commenting on the new statistics, she said: “These are deeply worrying figures. With state support coming to an end the threat of mass unemployment is very real. Ministers must act now to protect and create jobs.
“That means building on the furlough scheme by setting up a new job retention and upskilling deal, to keep people employed at firms that have a viable future.
“And it means creating good new jobs too. Recent TUC analysis shows the government could create 1.85m jobs in two years by fast-tracking green infrastructure investment and unlocking 600,000 public sector vacancies.”
The general secretary concluded: “When the crisis began, the Chancellor said he would do ‘whatever it takes’. He must keep that promise.”
Labour has been consistently critical of the government’s “one-size-fits-all approach” to the complete withdrawal of furlough support by the end of October, with Anneliese Dodds calling the move a “historic mistake”.
The Shadow Chancellor put forward a motion last week to provide a targeted extension to the scheme for hard-hit sectors, such as manufacturing or aviation, but the proposal was heavily rejected by the Commons.
The figures have also shown that the problem is particularly serious in Scotland, where the unemployment rate is sitting at 4.6%, compared to the UK-wide level of 4.1%.
Commenting, Scottish Labour leader Richard Leonard said: “These troubling figures show 4,700 workers joined Scotland’s dole queues last month alone, and Scotland continues to have the highest unemployment rate out of the nations of the UK.
“Just as the SNP government left Scotland unprepared for the public health crisis, this SNP government has left us unprepared too for this jobs crisis.”
It has been predicted that Scottish unemployment could increase to somewhere between 8% and 12% by the end of the year as the economic effects of Covid begin to fully materialise.