The unemployment rate in the UK has risen to its highest level in two years, with an official figure of 4.1% released by the office for national statistics.
Given the devastating impact of Covid-19 on the UK economy (GDP fell by 22.1% in the first half of 2020!), an unemployment rate of 4.1% is actually quite low, and perhaps testament to the success of the government’s Job Retention Scheme which has been partially paying the salaries of retained workers for the last 5 months.
The issue therein is that the scheme will be ending on the 31st October, and with over 9 million workers furloughed, there could be a huge wave of unemployment in the coming months.
The increased job loss has had a disproportionately higher impact on young people, with 13.4% of the economically active between the ages of 16-24 finding themselves unemployed.
The economic impact of Covid-19 has been particularly hard felt in the retail and hospitality sectors, both of which employ a large number of young people. In addition, firms who have been forced to cut costs by laying off workers are more likely to let go of their entry level and lower skilled workers at first, many of which are roles filled by younger employees.
With Covid-19 showing no signs of abating, economic growth still sluggish, and the likelihood of unemployment exploding in November, the UK government needs to plan their next move very carefully in order to avoid pushing the UK economy beyond recovery.
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term economically active?
Q2. Explain what type of unemployment the UK economy is currently experiencing.
Q3. Analyse the long-term impact of high unemployment on young people in the UK.
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