Redundancies rose by a record 181,000 in the period, as firms laid off workers in anticipation of the end of the furlough scheme, which was originally supposed to finish at the end of October.
The UK unemployment rate rose to 4.8 per cent in the three months to September, up from 4.5 per cent in August.
In October 2020, 33,000 fewer people were in payrolled employment when compared with September 2020 and 782,000 fewer people were in payrolled employment when compared with March 2020.
Estimates for July to September 2020 show 32.51 million people aged 16 years and over in employment, 247,000 fewer than a year earlier and 164,000 fewer than the previous quarter.
The ONS figures also showed there was a big fall in the number of 16 to 24-year-olds in employment, decreasing by 174,000 to a record low of 3.5 million.
Young people and self-employed
Research by Natwest and the Centre for Social Justice also shows how young people have been worst hit by lockdown and coronavirus restrictions.
The ONS also reported a 174,000 fall in self-employment, to 4.53 million, with a record 99,000 decrease for women in Q3 2020 compared to Q2. A record number of people, 277,000, switched from self-employment to employment in Q3 2020.
Laith Khalaf, financial analyst at AJ Bell, said: “The darkest hour is just before dawn, and with a potential coronavirus vaccine now on the table, there is light on the horizon for the labour market.
“The vaccine breakthrough will give businesses greater confidence that an end to the pandemic is in sight and will encourage them to retain staff for a bit longer. For now though, the statistics are pretty grim, and are likely to get worse before the cavalry arrives.
“The third quarter was a record-breaking period, not just in the scale of the redundancies witnessed, but in the distortions happening within the labour market. That’s clearly a sign of a system under stress as people shift their behaviour to cope with the economic shock of the pandemic.”
Jack Kennedy, economist at job site Indeed, said: “Two things are clear from the UK labour market’s mixed signals – the pain of job losses is being felt unevenly, but the chancellor’s furlough medicine appears to be working.
“Even though the very latest data suggests the overall pace of job losses is easing – the number of payrolled workers dipped by a relatively modest 33,000 in October – younger people are being hit disproportionately hard.
“Elsewhere the pace of redundancies accelerated in autumn as the furlough scheme was watered down. A record 314,000 people lost their jobs in the third quarter, more than double the number made redundant in the second quarter of the year and surpassing the previous 2009 peak.
“And yet there are some encouraging signs in this jobs report. Nearly a quarter of a million people have returned to the labour market, in the largest net flow from economic inactivity to unemployment on record.
“Most encouraging of all are the signs that employers are hiring again. In the three months to October there were more than half a million vacancies across the UK – a jump of 146,000 on the previous quarter.”