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Unemployment rate: How many people are out of work?

Ben King - Business reporter, BBC News
·4 min read
Two women walk past a job centre
Two women walk past a job centre

The UK economy is in lockdown, with many shops, restaurants and bars forced to close their doors.

So far, this hasn't resulted in a rapid rise in unemployment, as the furlough scheme has helped to protect jobs, but this is expected to change in 2021.

How high could unemployment go?

Most economists expect the unemployment rate (which counts how many people are able to work and want a job, but can't find one) to continue rising in 2021.

The government's spending watchdog the Office for Budget Responsibility expects 2.2 million people to be unemployed at the end of the year, or 6.5% of all workers.

The number of unemployed is expected to fall next year as the economy recovers from the crisis.

Without the billions spent on schemes to protect jobs, and the rapid roll-out of vaccines, the level would have been much higher. Last year it was feared that up to 4 million people would be unemployed.

How many people are currently unemployed?

The most recent unemployment rate - for October to December - was 5.1%, according to the Office for National Statistics (ONS).

This is the highest figure for five years, and means that 1.74 million people were unemployed.

The ONS also gathers weekly figures, which showed unemployment staying largely the same from October to December.

In November the government announced plans to extend the furlough scheme into the spring.

This is where it steps in to pay most of an employee's wages, when the employer cannot.

Without this, unemployment would most likely have continued rising faster.

Graph of unemployment rate
Graph of unemployment rate

Who is becoming unemployed?

Workers in the hospitality industry, retail and entertainment have been badly hit. These are the sectors which have seen the biggest impact from Covid restrictions.

They also employ large numbers of young people, who have borne the brunt of job losses.

Figures for the number of people employed on payrolls show the impact clearly.

During the pandemic more than half the drop in the number of employees has been among the under-25s.

Payroll by age, changes
Payroll by age, changes

How does the furlough scheme keep unemployment down?

Shops, bars, travel and entertainment companies have had to close because of coronavirus lockdowns, and many have decided that they can't afford to pay their workers.

However, under the furlough scheme the government has been able to help, and many businesses have been able to keep their staff on furlough instead of making them redundant.

This has helped to keep down the number of people being made redundant and becoming unemployed.

The furlough scheme has protected more than 11m jobs since the pandemic began, and 4.7m workers were on furlough in January.

Man wearing face mask walking past boarded shop
Lockdowns have forced many businesses to close, pushing up unemployment

Are there signs of the job market getting better?

The latest official statistics show a mixed picture, with many signs of improvement, even though unemployment is rising.

The total number of hours people work has continued to increase as parts of the economy reopen and people return to work.

The average amount people earn has been falling sharply during the crisis, but it rose 3.8% in the latest figures.

The number of people on company payrolls rose slightly in January, by 0.3%.

Meanwhile, the number of new jobs being advertised has been gradually increasing, though it is still 26% below where it was a year ago.

Recent redundancy figures from the Insolvency Service saw job cuts in January back to pre-crisis levels.

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 - far more than the rise in the number of people counted as unemployed.

In January 2021 there were 2.6 million seeking either Jobseeker's Allowance or universal credit because they were "searching for work". This compares with 1.4 million in March 2020, before the pandemic began to take effect.

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

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