IoD responds as unemployment ticks up to 5.1%

Responding to the latest official labour market statistics, showing the unemployment rate rose to 5.1% in the three months to December, Tej Parikh, Chief Economist at the Institute of Directors, said:

“As the pandemic lingers, jobs losses have continued to tick upward.

“Tight restrictions over the winter months will have eaten into many businesses’ reserves, forcing them into difficult decisions on their staff. Meanwhile, cash-strapped firms have relied on the furlough scheme to help retain employees, and without it unemployment would be significantly higher.

“The vaccine roll-out and reopening of the economy this year should help put a ceiling on job losses, but the Government will need to provide ongoing help. With restrictions remaining in place over the coming quarters, the Chancellor must move quickly to extend the Job Retention Scheme and other Covid-19 economic support beyond the spring. 

“The Budget next week needs to provide a bridge for businesses to begin the process of rescaling and rehiring. A one-off relief for employers’ National Insurance contributions would boost cashflow, and support job retention and creation. Financial incentives to support training and reskilling will also help firms to adjust and grow quickly, supporting the recovery.