The Growing Shadow of COVID-19 in the UK... 3-Month Unemployment Rate Hits Highest Since 2017

Employment Support Cuts Expected to Increase Unemployment Rate
UK Chancellor "Difficult to Protect All Jobs," Admits

British Prime Minister Boris Johnson is speaking at the House of Commons' 'Prime Minister's Questions' session on the 23rd of last month (local time), the day after announcing new restrictions for COVID-19.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The three-month unemployment rate in the UK reached 4.5%, the highest since the first quarter of 2017. The employment slump caused by the novel coronavirus disease (COVID-19) is becoming more apparent.

According to foreign media including Bloomberg, the UK Office for National Statistics (ONS) announced on the 13th (local time) that the unemployment rate for the three months from June to August rose by 0.4 percentage points (P) compared to the previous three months, reaching 4.5%. This is the highest level since 4.6% in the first quarter of 2017 and represents a 0.6P increase compared to the same period last year.

The number of layoffs increased by 114,000, the largest rise since 1995. The total number of unemployed was 220,700, which corresponds to a rate of more than 8 per 1,000 people. The ONS analyzed that layoffs were particularly concentrated in the hospitality and travel industries.

The number of employed people decreased by 153,000 compared to the previous three months, totaling 3,259,000. The decline was nearly five times larger than experts had predicted. As a result, the employment rate from June to August was 75.6%, down 0.3% compared to both the same period last year and the previous three months.

The employment slump in the UK is expected to worsen further. Earlier, when COVID-19 began to spread in earnest, the UK government decided to cover up to 80% of monthly wages, up to a maximum of ?2,500 (approximately 3.7 million KRW), if companies did not lay off employees but instead placed them on furlough or leave. There are concerns that large-scale layoffs will occur after this policy ends at the end of this month.

In response, the UK government introduced a policy where if employers have employees work at least one-third of their usual working hours, the government and employers each support one-third of the wages corresponding to the remaining non-working hours (up to ?698).

However, since the support amount is smaller than before, the employment market is expected to deteriorate further. The Bank of England forecasted that the UK’s unemployment rate will reach 7.5% by the end of the year. Chancellor of the Exchequer Rishi Sunak stated, "Reducing job losses is a top priority, but unfortunately, it will not be possible to protect all jobs."

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