Economics: Labour market news still negative

Date : 23 February 2021

New ONS data on unemployment is now available, covering the period up to November 2020. This shows UK the unemployment rate creeping up from 4.0% in January to 5.1% in November, meaning that the number of people unemployed rose by 380,000 (up 28%).

Young adults continue to bear the brunt of rising unemployment – unemployment rates for 16-17 and 18-24 year-olds were 25.3% and 13.4% respectively, in November. No age group or industry has escaped rising unemployment entirely, however.

343,000 people were made redundant in November, down slightly on the previous month, but still 3-4 times higher than the usual monthly rate before Coronavirus appeared.

A recent report from the Resolution Foundation suggests that UK workers take a pessimistic view of their future, with large numbers expecting to be made redundant soon and many searching for new work on pro-active basis. Those already unemployed do not expect to return to the workplace quickly.

Looking ahead, the Bank of England anticipates that unemployment will continue to rise over the course of 2021, possibly reaching as high as 8% before falling back quite rapidly.

However, more recent news concerning relaxation of “lockdown” and a return to more normal working conditions may give reason for greater confidence. The next OBR report, due in March may be more upbeat.

More economic news and analysis