IoD responds as unemployment ticks up to 4.9%

Responding to latest official labour market statistics, showing the unemployment rate rose to 4.9% in the three months to October, Tej Parikh, Chief Economist at the Institute of Directors, said:

“The pandemic took its toll on the jobs market in the Autumn.

“The unwinding of the Job Retention Scheme pushed up redundancies as firms struggled amid Covid-19 restrictions. The subsequent extension of furloughing will provide a lifeline for many jobs over the difficult winter months, but the big question is what happens after.

“While the roll-out of the vaccine has buoyed employers, it won’t automatically undo the damage done to their businesses by the pandemic. Hiring plans for next year remain stuck in neutral with many firms needing to tend to damaged balance sheets. To avoid a further uptick in unemployment at the end of Q1, the Treasury should consider measures to encourage job creation.

“A relief for employers’ national insurance contributions for example could ease cash flow difficulties and put the jobs market in a stronger position come the end of the furlough scheme. It’s crucial that March doesn’t become another cliff-edge, business leaders have already seen far too many of those of late.”