0203 GMT March 03, 2021
The Office for National Statistics said 1.74 million people were unemployed in the October to December period, up 454,000 from the same quarter in 2019, BBC reported.
The figures show 726,000 fewer people are currently in payrolled employment than before the start of the pandemic.
Almost three-fifths of this fall, 425,000, has come from those aged under-25.
However, the ONS said that there were some "tentative early signs" of the labor market stabilizing. There was a small increase in the numbers of employees paid through payroll over the past couple of months.
In January 2021, 83,000 more people were in payrolled employment when compared with the previous month.
"Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis," said Jonathan Athow, ONS deputy national statistician for economic statistics.
"However, the proportion of people who are neither working nor looking for work has stabilized after rising sharply at the start of the pandemic, with many people who lost their jobs early on having now started looking for work."
Despite this, Athow told the BBC's Today program that the true underlying picture was not yet clear due to the high number of people still on furlough.
He said figures from early February suggested that about six million people were currently furloughed, adding: "There is a huge amount of uncertainty about what will happen to them when that scheme ends."
The Chancellor of the Exchequer Rishi Sunak is preparing for next week's budget, which is expected to set out further plans to help the labor market.
"I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy," Sunak said.
"At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we'll provide through the remainder of the pandemic and our recovery."
The Bank of England expects the jobless rate to peak at 7.8% in the third quarter if the furlough program finishes as currently planned. That’s almost 2.7 million people, compared with 1.7 million the end of last year, according to Bloomberg.
The number of redundancies rose by 29,000 in the quarter to 343,000, marking the smallest increase since the second quarter of the year. Self employment accounted for all of the decline in the number of people in work.
Business lobbies want the government not only to extend furloughing, but also support for business struggling with mounting debts and negligible sales.
Mike Cherry, chairman of the Federation of Small Businesses, said the headline labor market figures conceal the “incredibly hard choices” that firms are having to make. He urged the government to cut employer national insurance contributions, a payroll tax, and reinstate bonuses for firms that retain workers.
“We’re looking ahead to our recovery,” said the government’s Employment Minister Mims Davies. “Our plan for jobs is creating new opportunities, boosting skills, and delivering a package of support for people of all ages, getting Brits back into work as we push to build back better.”
Average earnings growth accelerated more quickly than expected to 4.7% in the fourth quarter, the highest since 2008. The ONS said the figures were inflated by lower-paid jobs dropping out of the calculation. Underlying pay growth was just under 3%.