The number of UK workers on company payrolls edged up by 20,000 last month but has fallen by nearly 700,000 since March as the coronavirus crisis has claimed jobs across the economy, according to official figures.
The Office for National Statistics (ONS) said the number of employees on payrolls dropped by 673,000 between March and September.
It added that UK unemployment rose by 138,000 quarter on quarter to 1.52 million in the three months to August.
This saw the rate of unemployment jump to 4.5%, from 4.1% in the previous three months - the highest rate in three years.
Jonathan Athow, deputy national statistician at the ONS, said: “The latest monthly tax numbers show that the number of employees on the payroll was little changed in September.
“However, in total there were still nearly 700,000 fewer than in March, before the lockdown.”
He added: “Since the start of the pandemic there has been a sharp increase in those out of work and job-hunting but more people telling us they are not actively looking for work.
“There has also been a stark rise in the number of people who have recently been made redundant.”
Chancellor Rishi Sunak insisted the Government’s Plan for Jobs would help protect employment and “ensure nobody is left without hope”.
Last week he unveiled new job support for businesses forced to close under new coronavirus restrictions, which will see the Government pay two-thirds of each employee’s salary – up to a maximum of £2,100 a month.
Experts cautioned his measures may not be enough to prevent mass unemployment.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The Job Support Scheme will do little to hold back the tide of redundancies.
“We continue to expect the headline rate of unemployment to shoot up over the coming months.”
Tej Parikh, chief economist at the Institute of Directors, said: “With the furlough scheme unwinding, cash-strapped firms have been forced into difficult decisions about retaining their staff.
“Demand remains weak and as restrictions ramp up again many businesses will be stretched when it comes to paying wage bills.
“The Job Support Scheme may need to be beefed up if the Government wants to avert further rises in unemployment.”