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Fears many thousands could lose jobs as furlough scheme changes

Fears have been growing many thousands of people could be made redundant as the furlough scheme gradually phases out.

From Sunday, employers will have to contribute 20 per cent towards the wages of furloughed staff which rises from 10 per cent.

However, a survey suggests one in five companies still using the furlough scheme are planning to let staff go as a result.

The Treasury is also preparing to fully end the scheme by October.

The British Chamber of Commerce (BCC) polled 250 businesses with employees still on furlough.

Of those, 18 per cent said they were now more inclined to make staff redundant while 25 per cent would decrease working hours or move staff to part-time patterns.

Despite these concerns, almost 40 per cent said the change would have no impact on the business.

Official data shows 1.9 million people were still furloughed by the end of June, a decrease from 2.4 million a month earlier.

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Jane Gratton from the British Chamber of Commerce (BCC) said: “Today’s changes to the furlough scheme will likely result in many thousands of people being released back into the labour market, as employers who are still struggling to recover from the recession are forced to make redundancies and cuts to working hours.

“With widespread skills shortages across the economy, some will find new jobs where their skills are in demand, while others will need to retrain for opportunities in a different sector.

“Whether furloughed workers are returning to the workplace or the wider labour market, it is crucial that employers and the government give them the support and training they need to be re-engaged and productive.”

It comes after Rishi Sunak was told to apologise for “prematurely” withdrawing the furlough scheme.

Ahead of Mr Sunak’s visit to Edinburgh Glasgow and Fife this week, SNP’s shadow chancellor Alison Thewliss urged him to explain “why he is short-changing us on youth jobs” and going ahead with Universal Credit cuts that will “plunge half a million people into poverty”.

Ms Thewliss called on Mr Sunak “to apologise to the people and businesses here for withdrawing furlough support prematurely and risking thousands of unnecessary redundancies”.

She went on: “I would urge Rishi Sunak to explain to the people of Scotland why he is short-changing us on youth jobs, and ploughing ahead with Universal Credit cuts that will undermine the Scottish Child Payment and plunge half a million people into poverty, when at the same time he can find £250 million for a UK Government yacht.

“It is increasingly clear that the only way to keep Scotland safe from Tory austerity is to become an independent country with the full powers needed to protect jobs and secure a strong, fair and progressive recovery.”

By Leah Sinclair

Source: Standard

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Covid: Planned redundancies at lowest level since 2015

Employers are planning the lowest number of job cuts for over six years, as the economy reopens after the pandemic.

Redundancy figures for June from the Insolvency Service saw 15,661 positions put at risk in Great Britain.

Last June saw nearly ten times that number, the worst on record.

The reduction in expected redundancies comes despite the imminent end of the furlough scheme which was designed to protect jobs during the pandemic.

Employers planning 20 or more redundancies have to file a form called HR1 notifying government at the start of the process.

This data gives an early indication of moves in the labour market, months before they show up in the official unemployment figures.

Proposed redundancies have been on a downward trend since September, despite two lockdowns being imposed across most of the UK during that period. June saw the lowest monthly total since February 2015.

Redundancy figures from the Office for National Statistics have shown a similar trend, a few months later.

“The data suggest that there is no spike in redundancies coming in July or August,” says Xiaowei Xu, senior research economist at the Institute for Fiscal Studies. “The labour market is in a much better position than anyone expected at the start of the pandemic, and it shows how well the furlough scheme has worked,”

The latest numbers are the lowest since the Insolvency Service tightened up reporting guidelines, according to Tony Wilson of the Institute for Employment Studies.

Before that, it was more common for firms to fail to file the necessary paperwork when planning redundancies, leading to artificially lower figures, he says.

The number of HR1 forms filed has also been falling this year, with 179 forms filed by 151 different employers.

That’s the lowest number of forms since 2014, despite the winding down of the furlough scheme, where the government has supported jobs in the pandemic by paying wages when employers cannot.

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No rise despite end of furlough
From July, employers will have to pay 10% of employees’ wages, on top of pension contributions and employer’s National Insurance. That rises to 20% in August, until the scheme finishes completely at the end of September.

“Anyone who has been on furlough this year has already cost their employers money – so their employers must be keen to keep them on. It’s not surprising that they are not being made redundant in large numbers,” says Ms Xu.

A total of 11.6 million jobs have been furloughed during the pandemic, though only 2.4 million were still on furlough at the end of May.

The success of the furlough scheme and the vaccine programme have lead many economists to cut their forecasts of how many jobs would be lost in the pandemic.

“By the time the furlough scheme ends on 30 September, the economy is likely to be strong enough to support a level of employment not far off where it is now. In fact, there is evidence that firms are finding it increasingly difficult to hire workers, especially in industries such as transport and manufacturing,” says Ruth Gregory, senior UK economist at Capital Economics.

“I think it’s likely that many firms have already made and communicated their plans and that with the easing of restrictions happening on schedule next week, we just won’t see any significant increase in redundancy notifications over the next few months,” says Mr Wilson.

Until recently, HR1 data were not routinely published, except for in Northern Ireland.

Last year the BBC began requesting these figures through the Freedom of Information Act, revealing the extraordinary increase in redundancy plans through the spring and summer of 2020.

This year, the Insolvency Service has started to publish these figures every month on its website.

The data only covers firms proposing 20 or more job cuts, so smaller firms are not picked up by these figures. Employers sometimes notify more redundancies than they eventually make.

The figures are not classified as Official Statistics, which are subject to rigorous quality control procedures.

Data for Northern Ireland is published by the Northern Ireland Statistics and Research Agency as part of its monthly Labour Market Report.

By Ben King

Source: BBC

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How many jobs could be lost when furlough ends?

RISHI SUNAK’s big spend Budget revealed earlier this week that schemes such as furlough and SEISS are here to stay beyond the proposed end of lockdown restrictions. But many are still fearful of what’s to come when the Chancellor finally ends the support.

The Chancellor has made no secret of the fact he cannot save every job. Rishi Sunak said: “Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK. There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”

Despite the fact the extension has been welcomed and will be a chance for businesses to catch their breath following the worst of the pandemic and before support comes to an end, job losses are still likely to be inevitable in the autumn.

Hundreds of thousands of jobs were lost in October when the Chancellor left it too late to announce an extension to the scheme in the face of mounting new cases and an inevitable lockdown on the way.

With the extension and amendments to the scheme, the Chancellor is looking to soften what will be an inevitable blow to jobs across the country.

As the furlough scheme progresses, support will taper down, with employers being asked to contribute 10 percent towards the hours staff do not work in July and this will increase to 20 percent in August and September.

Gary Hemming told Express.co.uk: “When the furlough scheme looked to be coming to an end in October, just prior to the extension, 314,000 people were made redundant.

“At that point there were 2.4 million furloughed people in the UK, meaning 13.08 percent of furloughed workers were made redundant as the deadline loomed.

“Of course, the scheme was extended as the redundancies began, so we’ll never know the true scale of redundancies that would have otherwise happened.

“The real concern is that we now have 4.7 million people furloughed in the UK, and even a similar level of redundancies would result in another 614,760 people being made redundant in the UK.

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“Of course, the figures in November may well have ended up being worse had the scheme not been extended, which means that sadly, the figure of 614,760 predicted for September may well be far lower that the reality.”

Peter Nicholson, senior associate and solicitor specialising in employment law at Nelsons, said: “There are very few who would argue that the furlough scheme has not saved a significant number of jobs during the coronavirus pandemic. However, the big question now is how many jobs will be saved when it comes to an end in September this year.

“According to the latest government statistics, published on 25 February 2021, around 4.7 million jobs were furloughed as of 31 January this year, with an estimated 28 percent of these being ‘partial’ or ‘flexi furlough’ – where the employee is working part time or limited hours.

“The Office for Budget Responsibility (OBR) forecasts that the unemployment rate will peak at 6.5% in the fourth quarter of 2021, when the furlough scheme closes.

“However, that is an improvement on the previously forecast peak of 7.5 percent that was released in November last year.

“Realistically, while the furlough scheme has saved a considerable number of jobs so far, I expect there will be a significant number of job losses when it closes in September. It’s difficult give a definite figure as to how many redundancies there will be, as this depends on how the economy reacts as restrictions are lifted.”

The extension of the furlough scheme has been widely praised by the public and by businesses and business leaders to stop a sharp rise in unemployment.

Lee Murphy, managing director at The Accountancy Partnership said: “The decision to extend furlough to the end of September will no doubt be a welcome relief for businesses with employees.

“An abrupt end to the Coronavirus Job Retention Scheme (CJRS) could have resulted in thousands of lost jobs, so it is great to see this recognised in the Budget with a continuation of the support which has protected more than 11 million jobs so far.

“The furlough extension allows businesses to forward plan how they manage their employees for the remainder of the restrictions and beyond, without being forced into difficult redundancy decisions.

“With five months between now and August, businesses have adequate time to consider cash flow and, if all goes to plan with the gradual reopening, many businesses will be trading by then to support the businesses contributions to furloughed staff.

“It may be that even with the support available, there are still difficult decisions to make about prioritising the retention of those highly skilled workers who will most benefit the recovery of the business.

“Extending the CJRS to the end of September, beyond the planned end of restrictions in June, will give businesses the time and economic support they need to get back on their feet while the economy reopens, as this will not happen overnight.

“It is reassuring that the government is offering this support as it could be critical to many businesses’ viability during the reopening.”

Some however, have been less receptive to the support packages provided by the Chancellor.

Martin Taylor, Co-Founder Deputy CEO of Content Guru told Express.co.uk: “Keeping the job retention scheme running is risking the UK becoming a zombie economy of companies that are not viable but continue to exist on life support.

“Furlough is expensive. Some businesses are not viable but are keeping staff on for the time being as a ‘service’ to them and the country.

“However, it means that these people are not re-introduced to the job market where there are real shortages.

“What’s needed is retraining and reskilling.”

By ALISS HIGHAM

Source: Express

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As the furlough scheme comes to an end but a national lockdown looms again, Britain braces for a new tsunami of job losses

Major companies have culled nearly 200,000 British jobs already as they struggle with the devastating impact of the coronavirus pandemic, a Mail audit has found. 

As shops and eateries face growing curbs, and international travel is hit by a collapse in demand, leading firms from Marks & Spencer and British Airways to Rolls-Royce and Debenhams have slashed around 183,900 roles across the UK this year. 

But experts and business leaders warned this is just the tip of the iceberg – far worse is to come as fresh Covid-19 lockdowns slam the brakes on the economic recovery. 

The Government’s furlough scheme – which supported 9m jobs at its height – comes to an end today and will be replaced by a slimmer jobs support scheme.

Employers have warned it will not be enough to stave off more redundancies if restrictions tighten further, as businesses face tumbling visitor numbers or being forced to close altogether. Unemployment has already risen to a three-year high of 4.5 per cent, with the Bank of England predicting it could rise to 7.5 per cent by the year’s end, potentially leaving 2.6m out of work.

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And this week the Resolution Foundation estimated the UK is facing the highest level of youth unemployment since the 1980s, after a survey found 20 per cent of 18 to 24-year-olds could soon be jobless.

In a fresh warning yesterday, the Federation of Small Businesses (FSB) called on ministers to make sure that firms ‘have the support they need to make it through the next few months’.

Mike Cherry, the group’s national chair, said: ‘With new restrictions being imposed in every part of the country, many of which are set to get tighter in the weeks to come, small businesses face huge difficulties over the winter months ahead.

‘Our latest small business index found that 30 per cent of employers expect to make some staff redundant in the next three months.

‘That is the scale of concern and uncertainty that small firms are faced with for their businesses, with many letting staff go for the very first time.’

Pubs have warned that lifeline grants promised by Chancellor Rishi Sunak will not reach them unless state aid rules are changed – putting 1m jobs at risk. The British Beer & Pub Association, British Institute of Innkeeping and UK Hospitality warned that with – out action some 20,000 venues in areas hit by Tier Two and Three lockdowns will be starved of the desperately-needed cash. They said: ‘If action is not taken, thousands of businesses might not survive to the spring.’ Jobs at other leisure sector businesses, such as nightclubs, have also taken a sharp hit.

The UK’s largest nightclub owner, The Deltic Group, had already cut around half its staff before it put itself up for sale yesterday. The Treasury has insisted that its jobs support scheme and job retention bonus – awarded to firms for keeping on staff who were previously furloughed – will together cover 95 per cent of total wage costs for the average furloughed employee until February.

Around 9.6m people used the furlough scheme in total, though the most at any one time was 8.9m. Sunak said the programme had supported ‘9.6m jobs through some of the most challenging economic times’.

But he added: ‘It’s right that as we move towards a more targeted approach to tackle the virus, our support becomes more targeted too. The jobs support scheme will continue to protect jobs through – out the difficult months ahead and is part of our comprehensive plan for jobs.’

By MATT OLIVER

Source: This is Money

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