The UK’s unemployment rate rose to 4.9 per cent in the three months to October, a lower increase than had been expected.
The rate was up 0.1 per cent from the three months to September, when it stood at 4.8 per cent, new ONS figures showed.
Economists polled by Reuters had expected the jobless rate to rise to 5.1 per cent as a result of the economic turbulence of coronavirus.
But redundancies rose to a record high of 370,000 for the same three month period, a jump of 217,000 people in the quarter.
It means that since the pandemic began to spread in the UK back in March, 819,000 jobs have been lost.
Hospitality has been the worst hit sector, accounting for a third of the job losses, followed by retail.
Economists said that the huge jump in job losses was due to the expected end to the government’s furlough scheme, which has protected millions of jobs during the pandemic.
As a result of the coronavirus pandemic, the unemployment rate is now 1.2 per cent higher than it was a year ago.
It has also increased by 0.7 per cent over the last quarter, the ONS said, as the government’s landmark job protection schemes were eased back.
Firms began to lay off more staff in anticipation of the furlough scheme ending on 31 October, but it was subsequently extended due to further lockdown measures.
Tej Parikh, chief economist at the Institute of Directors, said: “The pandemic took its toll on the jobs market in the Autumn.
“The unwinding of the Job Retention Scheme pushed up redundancies as firms struggled amid Covid-19 restrictions.
“The subsequent extension of furloughing will provide a lifeline for many jobs over the difficult winter months, but the big question is what happens after.”
He added that the Treasury should consider job creation measures such as relief from national insurance payments in order to encourage hiring.
And British Chamber of Commerce head of economics Suren Thiru said that it was vital the UK signed a Brexit deal with the EU in order to protect jobs.
“Delivering a UK-EU trade deal that provides clarity and certainty to businesses is crucial to avoid further damaging the UK jobs market already weakened by the pandemic”, he said.
According to EY Item Club chief economist Howard Archer, the unemployment rate could rise as high as seven per cent without a trade deal.
Despite the gloomy outlook, there were some good signs, with the number of vacancies continuing to rise.
A further 110,000 jobs were added over the quarter, meaning that the total number of vacancies is now at 547,000.
This, however, is still lower than prior to the pandemic, and 31.5 per cent down on 2019’s levels.
Employment minister Mims Davies said: “It’s been a truly challenging year for many families but with a vaccine beginning to roll out with more perhaps to follow and the number of job vacancies increasing there is hope on the horizon for 2021.
“Our Plan for Jobs is already helping people of all ages into work right across the UK, with increased Jobcentre support, new retraining schemes, new job placements like Kickstart for our young people and more to come as we are determined to build back better.”