Unemployment rose to 5.1% in December, while the government’s layoff program continued to prevent a sharp rise in job losses ahead of Christmas.
With most of the economy still in forced hibernation, the unemployment rate in the three months to December rose from 5% in November and rose 1.5 percentage points from a year earlier, according to the Office for National Statistics.
Recent HM tax and customs data for January showed that there were 726,000 fewer people on companies’ payrolls in January than in February 2020, before the pandemic.
But the same HMRC assessment also found that, despite the onset of the third lockout, companies returned some full-time employees for the second month in a row.
About 83,000 more people were returned to the payrolls of companies compared to December 2020, HMRC said.
The recent rise in payrolls is thought to be the result of companies returning staff from work, although millions of workers remain in the government’s subsidy scheme while their jobs are volatile.
More than 1 million self-employed are also considered unemployed, many of whom do not qualify for state support.
A report by the London School of Economics last month showed that one in seven companies – employing 2.5 million people – could be forced to close by spring without additional support from the Treasury.
Rishi Sunak is expected to provide much of the support offered to workers affected by the pandemic, but is unlikely to extend the range of benefits to all self-employed people.
Tay Parikh, chief economist at the Institute of Directors, said: “As the pandemic persists, job losses continue to rise.
“Strict restrictions during the winter months will eat away at the reserves of many companies, forcing them to make difficult decisions about staff. Meanwhile, companies with a cash supplement relied on a layoff scheme to help retain employees, and without it, unemployment would have been significantly higher. “