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Collective redundancyCoronavirusLatest NewsJob creation and lossesLabour market

Redundancy rate hits record high as payrolled employees plummet

by Ashleigh Webber 26 Jan 2021
by Ashleigh Webber 26 Jan 2021

The number of employees on payrolls has plummeted by 828,000 since the Covid-19 pandemic began, with the number of redundancies reaching a record high in September to November 2020.

In the three months to November 2020, the redundancy rate reached a record high of 14.2 per thousand, according to the latest labour market overview from the Office for National Statistics.

There were 398,000 fewer people in work between September and November 2020 than a year earlier. This was the largest annual decrease seen since 2010.

Early estimates for December 2020 indicated that the number of payrolled employees fell by 2.7% compared with December 2019, which is a fall of 793,000 employees. Since February 2020, 828,000 fewer people were on company payrolls.

News that the CJRS has been extended to the end of April 2021 should help to mitigate the impact of the pandemic on job losses in the next three months” – Joanne Frew, DWF

The estimated employment rate was 75.2%, 1.1 percentage points down on a year earlier. The rate was 78.4% for men (1.9 percentage points down) and 72% for women (down 0.4 percentage points).

As the figures were published, Hays Travel, which bought the shops operated by the collapsed Thomas Cook in 2019, announced that it would close 89 of its 535 stores. The 388 staff affected by the closures would be offered alternative work in order to minimise redundancies.

Jon Boys, labour market economist at the CIPD, noted that furlough had kept the growth in the unemployment rate (currently 5%) to a minimum, but noted that official forecasts expect it to peak at 8%.

He said: “It’s worth remembering that redundancies are not an easy or cheap option for businesses, costing around £11,000 per individual.

Impact of Covid-19 on employment

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“Many of these jobs stand to be viable again in just a few months’ time, which is why the CIPD is calling for the furlough scheme to be extended until at least the end of June. This would help to protect viable jobs from a period of temporary disruption while the vaccine is rolled out and buy time for the start of economic recovery.

“It is also important that the furlough scheme is linked to support for training for workers who are furloughed or working reduced hours.”

Numerous organisations including the CBI and CIPD have called for the furlough scheme to be extended beyond April. Most recently, the Institute for Employment Studies said “flexible furlough” should be made available until the autumn to protect those on low incomes.

The figures included the period in which employers were expecting the Coronavirus Job Retention Scheme to end on 31 October 2020 which may have resulted in an increase in redundancies, said Joanne Frew, head of employment at law firm DWF.

“In addition, the four-week lockdown in November 2020 resulted in further difficulties for employers,” she said.

“News that the CJRS has been extended to the end of April 2021 should help to mitigate the impact of the pandemic on job losses in the next three months. Unfortunately, this extended support is not enough for some businesses, which are already in financial crisis, particularly those in hospitality and retail.  As the impact of the third national lockdown takes its toll we can expect further redundancies.”

Matt Weston, managing director at recruitment firm Robert Half UK, said demand for staff would increase when the lockdown is eased and the Covid-19 vaccination is rolled out to more people.

“Despite today’s figures, we are seeing early indications of recovery for companies and individuals alike,” he said. “Our latest research shows that four in five UK businesses remain confident about their growth prospects for the first half of the year, with almost a quarter of companies planning to actively expand their workforce over the coming months.

“The key sectors currently driving demand for talent include manufacturing, logistics, pharmaceuticals, financial services and IT. What’s more, now that the Brexit deal has been signed, we are starting to see increased appetite for roles such as Finance Analysts, Supply Chain Managers and Logistics Administrators.”

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Despite the tough economic conditions, the ONS also revealed that average total pay including bonuses grew 3.6% between September and November 2020. Pay excluding bonuses also increased by 3.6%.

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Ashleigh Webber

Ashleigh is a former editor of OHW+ and former HR and wellbeing editor at Personnel Today. Ashleigh's areas of interest include employee health and wellbeing, equality and inclusion and skills development. She has hosted many webinars for Personnel Today, on topics including employee retention, financial wellbeing and menopause support.

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