The Federation of Small Business (FSB) has called for “urgent action” to reduce the upfront costs of unemployment, as rates reach record highs.
The news comes as the UK’s unemployment rate has increased to 5% in the three months to November 2020, up from 4.9%, the Office for National Statistics (ONS) has revealed.
According to the ONS, an estimated 1.72 million people were unemployed, up from 418,000 in the same period last year.
Unemployment reached its highest level since July to September 2015.
In addition, 280,000 people had reported redundancies in the three months prior to the survey.
Emelia Quist, employment and pensions policy manager at the FSB, said:
“These figures are a stark reminder of the job challenge we face. With the option to furlough still rightly available, they don’t truly reflect the mountain we have to climb.
“With redundancies soaring and vacancies falling, urgent action is needed to bring down the upfront costs of employment. Cutting employer’s National Insurance Contributions (NICs) – a charge levied on employers even when their staff are furloughed – would be the best place to start.”
Tej Parikh, chief economist at the Institute of Directors, added:
“The pandemic continues to rip through the labour market.
"A return to tighter restrictions late last year will have stretched businesses' ability to retain staff. Meanwhile, the furlough scheme will have provided an invaluable cushion for many firms, preventing unemployment from edging up even further.”
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