Companies are cutting hundreds of thousands of jobs as Covid-19 continues to hit the economy.

The unemployment rate is rising and the coming end of government support schemes could see it rise even further. 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 who are able to work and want a job, but can’t find one.

The most recent unemployment rate – for June to August – was 4.5%, according to the Office for National Statistics (ONS).

That is an increase of 0.4% over the previous three months, and meant that 1.5 million people were unemployed.

However, this number is always based on surveys taken in previous months and is not right up to date.

Also many people who don’t have a job, but aren’t looking for one because they don’t think they will find one, don’t count as unemployed by this measure.

Another more current measure of unemployment suggests that the real picture might be worse. The claimant count measures how many people are claiming benefits for being out of work, or on very low incomes.

Between March, when the lockdown began, and September, the number of people claiming these benefits rose 120% to 2.7 million.

Who is becoming unemployed?

One of the hardest-hit groups has been young people. 156,000 fewer 16- to 24-year-olds are employed, compared to three months ago.

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 reducing the number of tourists.

Why is unemployment beginning to rise?

The government has been using measures to protect jobs. Under the furlough scheme, it has been paying most of the wages for workers when their employers cannot. That has prevented many of those people becoming unemployed.

But the furlough scheme is being wound down. Employers are being asked to pay a bigger proportion of the costs of their employees and the scheme will close at the end of October.

This is one reason why unemployment has begun to rise, as many businesses will decide they cannot afford to start paying those workers again and need to let them go.

The latest figures saw a record rise in the number of redundancies to 227,000. That is the highest level since 2009, the last time there was a major economic downturn.

The Chancellor, Rishi Sunak, announced a new programme called the Job Support Scheme to replace furlough, but it is less generous. Many employers may decide they still can’t afford to keep their staff on.

Are there signs of things getting better?

From June onwards the government has allowed large parts of the economy to reopen, and this has contributed to an improvement in many areas.

The total number of hours people worked in August 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 began to stabilise between May and July.

The number of job vacancies available also saw a record increase in the latest figures, but there are still 40% less than a year ago.

However, in the autumn the government has been announcing new restrictions across the country as a second wave of the virus takes hold.

Pubs for instance are shut completely in some areas, such as central Scotland, and ordered to close at 10pm elsewhere. People are being urged to work at home if they can.

How high could unemployment go?

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

Scenarios published by the government’s spending watchdog, the Office for Budget Responsibility, give an official view of what might happen to unemployment.

In its optimistic scenario, the unemployment rate peaks at 9.7% this year, and returns to pre-crisis levels in 2022.

In its least optimistic scenario, it peaks at 13.2%, in 2021 – with four million people out of work. It is still at 6.3% by the end of this scenario in 2024 – well above pre-crisis levels.

All these measures will have an impact on the economy, and on employment.


Original article ‘Unemployment rate: How many people are out of work’ Written by Ben King Published by


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