Crisis and unemployment rate

London’s unemployment rate is UK’s highest unemployment rate: How many people are out of work?


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.

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.

As covid-19 drives unemployment rates around the world to levels unseen in generations, once radical economic policy proposals are rapidly gaining a hearing. Martin Hensher examines how job guarantee or universal basic income schemes might support better health and better economics

Covid-19 has been a dramatic global health and economic shock. As SARS-CoV-2 spread across nations, economic activity plummeted, first as individuals changed their behaviour and then as government “lockdowns” took effect.1 Macroeconomic forecasters foresee a major recession continuing through 2020 and into 2021.2 Although the governments of many nations have taken novel steps to protect workers, unemployment has risen dramatically in many countries (box 1fig 1); poverty and hunger are on the rise in low and middle income countries.5 Covid-19 has directly caused illness and death at a large scale, and further threatens health through disruption of access to health services for other conditions.

Research shows young black Londoners are particularly badly affected, prompting a new City Hall-backed initiative

London had the highest rate of unemployment in the UK between September and November last year. While unemployment in the UK as a whole rose to 5%, the rate in London reached 6.5%, according to new figures from the Office for National Statistics (ONS).

Around 885,000 Londoners, close to 10 % of the capital’s population, currently rely on government support, and with schemes such as furlough set to end in April, there are fears that many will face a “financial cliff edge” if they are not extended.

The London Assembly’s economy committee has today written to Sadiq Khan to outline its recommendations for what he must do to address the situation.

Committee chair Leonie Cooper, said: “Today’s figures showing current unemployment levels in London are shocking, and are another stark reminder of the impact that Covid-19 has had on our economy. Thousands of Londoners are now unemployed. We must always remember the people and families behind these numbers, each and every one facing struggle. It must now be a political, as well as an economic priority, to protect as many jobs as possible.

“The economic issues that Covid-19 has created and revealed must not be looked at in isolation. There’s a golden thread that ties them all together. As the leader of London, the Mayor must work with the government on behalf of Londoners to develop a plan to support those who are suffering financially due to the pandemic.”

In addition to today’s sobering figures, recent research from City Hall and The Equal Group found that unemployment is disproportionately affecting young black men in London. The research found that 33% of black men in London are unemployed compared to 15% of white men.

This has led to the launch of the Workforce Integration Network Design Labs, a programme aimed at tackling the underrepresentation of young black men in work and focusing specifically on the construction and infrastructure industry.

Speaking about the launch, Khan said: “The launch of Design Labs will not only help employers enrich their workforce but empower them to become more, equal, more inclusive and better able to make full use of the talent we have in our city.

“Your background should have no bearing on what you can achieve yet, even in a city as diverse as London, too many young black men face barriers to employment. Every Londoner deserves the opportunity to fulfil their potential and finding pathways into meaningful work is an important part of that.” provides in-depth coverage of the UK capital’s politics, development and culture. It depends greatly on donations from readers. Give £5 a month or £50 a year and you will receive the On London Extra Thursday email, which rounds up London news, views and information from a wide range of sources, plus special offers and free access to events. Click here to donate directly or contact [email protected] for bank account details.

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.


image captionLockdowns 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.

media captionTen tips for getting your dream job

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.