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Unemployment rate: How many people are out of work?

By Ben King
Business reporter, BBC News

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  • Coronavirus pandemic
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Employers are cutting hundreds of thousands of jobs as Covid-19 continues to hit the economy.

While many parts of the country went into lockdown to combat the spread of the virus, unemployment numbers have been rising sharply. How high could the unemployment rate go?

How many people are unemployed?

The most widely used measure is the unemployment rate. It counts how many people are able to work and want a job, but can't find one.

The most recent unemployment rate - for July to September - was 4.8%, according to the Office for National Statistics (ONS).

That is an increase of 0.7% over the previous three months, and meant that 1.62 million people were unemployed.

However, this number is always based on surveys taken in previous months and is not right up to date. Some of the data was gathered in July and August, when infection rates were falling, and large parts of the economy were reopening.

So this figure is likely to carry on rising in coming months.

How high could unemployment go?

Most economists expect unemployment to continue rising for the rest of the year.

UK unemployment is likely to reach 2.6 million in the middle of 2021, according to the government's economic watchdog, or 7.5% of the working age population. It's currently about 1.6 million.

This is echoed by the Bank of England, which forecasts that unemployment will most likely peak at about 7.7% in April to June of next year.

There was a high degree of uncertainty around that forecast, with a small chance that it could rise as high as 10%.

However, those forecasts don't take into account the government's decision to extend the furlough scheme to the end of March.

Why is unemployment beginning to rise?

The government has been trying to protect jobs through a number of measures. The largest is the furlough scheme, where it pays most of the wages for workers when their employers cannot. That has prevented many of those people becoming unemployed.

However, the furlough scheme was being wound down in September and October, ahead of its planned closure on 31 October.

Many companies cut jobs in preparation for the end of the scheme, and July to September saw a record rise in the number of redundancies of 181,000.

The government has now announced an extension to the scheme for another five months, which it hopes will protect more jobs.

The easing of lockdown restrictions across the summer also boosted the numbers of people counted as unemployed.

People who weren't looking for a job during the first lockdown were considered "economically inactive", and weren't included in the figures. But as the rules changed, they began to look for work and were therefore classed as unemployed.

The figures for July to September saw a record number of people move from inactive to unemployed - 215,000.

Who is becoming unemployed?

One of the hardest-hit groups has been young people. The figures show that 174,000 fewer 16- to 24-year-olds were employed in July to September, compared to the previous three months.

The ONS says that this is because young people are more likely to be working in areas such as hotels, restaurants and tourism. Jobs like these have been particularly hard-hit by lockdown, and quarantine restrictions have reduced the number of tourists.

Are there signs of the job market getting better?

The latest official statistics capture the state of the country before a lockdown across all of England was announced, and the extension of the furlough scheme.

They do show a picture of many things improving, although that may not last.

The total number of hours people worked in July to September increased as parts of the economy reopened and people returned to work.

The average amount people earn had been falling sharply during the crisis, but it rose 1.9% in the latest figures (excluding bonuses).

The number of job vacancies available also continued to increase, but there are still 35% less than a year ago.

image copyrightGetty Images
image captionShopping areas which would normally be busy are quiet because of new lockdowns

How many people are claiming out-of-work benefits?

The start of the pandemic saw a big increase in the number of people claiming out-of-work benefits, which was much bigger than the rise in the number of people counted as unemployed.

In October 2020 the number of people claiming either Jobseeker's Allowance or universal credit because they were "searching for work" was 2.6 million, 1.4 million higher than March, before the pandemic had begun to take effect.

However, some of these people are working, but with low earnings either because they are on low wages or short hours.

The ONS says it cannot tell how many of those people are out of work, or whether they are now able to get universal credit because the rules for claiming it have changed.

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