UK labour market sees record redundancies

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Today’s labour market data covers a period of limited restrictions over August and September as well as the introduction of the tier system in October. Redundancies increased to record numbers, employment fell and the number of vacancies remains below pre-pandemic levels, meaning those out of work may continue to find it challenging to re-enter the labour market. Hospitality, retail and services have been particularly hard hit.

The number of employees on payroll has fallen by 819,000 since February, according to November’s HMRC PAYE.  September workforce figures show the largest drops in jobs are in administrative and support services and hospitality. While this reflects a slight improvement in September compared with the first lockdown period, crucially it also indicates that economic performance remains far below pre-pandemic levels.

 Figure 1: Change in workforce jobs by industry between March and September 2020 (in thousands)

Although the numbers appear to be coming down slightly from a peak in September, the level of redundancies is expected to remain high over the winter. The BICS indicates that across industries, 7.3% of the workforce is expected to be made redundant over the next three months. Redundancies are likely to be highest in sectors that were hardest hit by COVID-related restrictions and changes in consumer demand, highlighted through the graph below.   

Figure 2: Proportion of workforce expected to be made redundant over the next three months, by industry

Source: Business Impact of Coronavirus Survey (BICS), wave 17: Approximately what percentage of your workforce do you expect to be made redundant over the next three months?

Redundancies on this scale will present significant challenges as there aren't enough new jobs opening up for affected workers to move into. When the economy reopened after the first lockdown, job vacancies started to rise again. But today’s release shows recruitment is yet to recover, with vacancies still 31.5% below pre-pandemic levels.

Figure 3: Change in all vacancies (thousands)  

The sectors that have seen the strongest increase in vacancies since the summer are wholesale and retail (13,000 increase in vacancies on the quarter) and information and communication (11,000 increase in vacancies on the quarter).

Unsurprisingly, the hospitality sector experienced the largest reduction in vacancies this year, as this quarter’s levels remain 64% below the same time last year. This is followed by wholesale and retail (50.7%), other service activities (46.6%) and financial and insurance activities (40.1%).

With the Coronavirus Job Retention Scheme coming to an end in March 2021, recruitment could stall further as businesses look to make additional savings, meaning those out of work will find it increasingly difficult to access new job opportunities.

Alongside the rise in unemployment we are witnessing, which significantly reduces household income, many workers have seen earnings falls due to furlough and other reductions in hours since the onset of the crisis. Recently, we presented evidence that these falls in financial wellbeing have also had strong implications for mental wellbeing. The longer the crisis lasts, the more likely it is that workers will experience financial hardship and concomitant negative impacts on their mental wellbeing.

With a challenging winter period still to come, it is vital that the Government strengthens our social safety net so that people can get the support they need. This should begin by reversing plans to cut essential Universal Credit payments by £20 per week and removing the threat of sanctions for those looking for work in these challenging circumstances.


  • covid19
  • economy
  • labour market statistics
  • redundancies
  • unemployment
  • Vacancies


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