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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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Job losses could surge as furlough support reduces from today

Redundancies could rise sharply in the months before the UK’s furlough scheme is fully wound down, a leading economic think tank has warned today.

The Institute for Fiscal Studies expects there to be a rise in “redundancies over the summer even before the final end of the scheme.”

Bosses will need to pick up 10% of their furloughed workers’ pay in July, rising to 20% in August and September before the scheme is removed entirely.

The IFS said it will cost businesses £322 in July to keep an employee earning £20,000 a year on the books.

In August and September this will rise to £489.

Tom Waters, a senior research economist at the IFS, says: “The furlough scheme does need to be wound down as the economy recovers, rather than attempting to keep every job on life support. But this does mean that some will end up unemployed.”

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Around 450,000 companies who still have furloughed staff will need to start picking up 10% of the bill from today, according to Labour Party statistics.

This will cost them a combined £225 million, the party said.

Over 2m workers still on furlough

According to data published by HMRC today, 2.4m people are still on furlough in the UK, down from a high of 9m in May 2020. However, the figure is dropping rapidly and around one million people were taken off the scheme in May.

Daniel Tomlinson, Senior Economist at the Resolution Foundation, says: “The grand reopening of the economy in May has caused over a million people to return to work from furlough. It’s especially encouraging to see so many young people – who have been hardest by the Covid economic crisis – finally returning to work.”

ONS data shows the labour market is recovering as economic activity starts to gather momentum as a result of coronavirus restrictions being lifted. The number of pay rolled employees rose for the sixth consecutive month in May 2021, up by 197,000 to 28.5m.

Chancellor Rishi Sunak said: “Our Plan for Jobs has supported people’s jobs and livelihoods throughout the pandemic and it’s fantastic to see so many people coming off furlough and into their workplaces with our restaurants, pubs and shops reopened.”

“These figures show what we always hoped would happen – that the scheme is naturally winding down as the economy reopens, but continuing to support those businesses and employees that need our help.”

By Jack Barnett

Source: City AM

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Furlough scheme has cushioned Covid blow, but job losses loom

It is clear from the latest unemployment figures that the furlough scheme is working. With more than 5 million people on the government’s main wage subsidy, it has proved its worth yet again as a method of job protection, cushioning the blow from the pandemic as the UK entered a third lockdown.

Thousands of British companies have learned from the first two lockdowns. They have adapted to life online and kept goods and services moving, albeit mostly within the boundaries of the UK after the government left exporters to deal with the worst possible exit from the EU short of leaving without a deal.

Larger companies especially have looked ahead to a time when restrictions are lifted and opportunities for improved sales present themselves again.

But that is where the good news ends for the jobs market. If we look at the figures produced by the Office for National Statistics for the three months to the end of January, the fall in the unemployment rate to 5% from 5.1% is not so cheery.

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The data shows that most of the ups and downs in the rate can be attributed to the short-term decisions of employers that operate in the worst affected industries.

Students who would normally have worked in the hospitality sector have not signed on as unemployed, they have disappeared from the employment register altogether. This has the effect, along with other young people who give up trying to find a job, of bringing down total participation rate to 79% in the three months to January, its lowest level since August 2019.

It shows, said Tony Wilson, the head of the Institute for Employment Studies, that new hiring by companies outside the very largest firms is continuing to fall back and all of the improvement is being driven by fewer people leaving work rather than more people getting new jobs.

“This is proving to be a disaster for young people, who now account for nearly two-thirds of the fall in employment and none of the recent growth,” he said.

Then there are the number of workers not being paid while their job is on hold, which has climbed from 200,000 to more than 300,000.

It is likely that the lower rate of redundancies in the three months to January of 11%, down from a peak of 14.2% in November, can be attributed to greater use of the furlough scheme.

It shows the lockdown and government support schemes mask a weakening labour market and when the furlough scheme ends in September, a spike in unemployment will follow.

There is a different way to deal with the situation. If the chancellor, Rishi Sunak, ditched his day-by-day approach to dealing with the pandemic and made a promise to maintain support for as long as it takes, employers could stop planning for cliff edges in subsidy schemes and plan for growth instead.

By Phillip Inman

Source: The Guardian

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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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UK Redundancies Are Rising Faster Now Than In 2008

New figures have found that UK redundancies are rising at a faster rate as a result of the coronavirus pandemic than they did during the 2008-2009 financial crash.

Stark new analysis from the Office for National Statistics (ONS) has found the rate of job losses linked to the pandemic has already exceeded the highest rate seen during the financial crash with those working in the admin and support services industry hit the hardest.

The ONS’s quarterly analysis of the labour market up to December 2020 found the UK’s redundancy rate was has risen consistently since the beginning of the pandemic and is currently sitting at a record peak of 14.2 per thousand employees, compared to a maximum of 12.2 per thousand during the previous financial downturn.

But the ONS warned the economic impacts of the pandemic, which are higher than during 2008-2009, would continue “manifesting themselves in the economy”.

“Policy measures introduced to contain the spread of the virus, such as public health restrictions and voluntary social distancing, have had pronounced impacts on the UK economy,” they said.

“Major shocks to the economy, such as the coronavirus pandemic in 2020 and the recession between 2008 and 2009 have different causes and policy responses, but they have a common consequence: they cause the economy to contract and unemployment and redundancies to increase.”

Meanwhile, the stats watchdog found a major rise in the number of companies who expected large redundancies of 20 or more employees, rising from 485 in March 2020 to 1,734 in September.

The ONS analysis found the highest rates of redundancy had been recorded in the administrative and support services industry with 35.8 per thousand employees, followed by those in the “other” category, which includes arts, entertainment and recreation, which had rates of 30.5 per thousand.

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They also found that job losses were markedly higher among disabled people, with 21.1 per thousand being made redundant between July to November 2020, compared to 13.0 per thousand among non-disabled workers.

It comes after a recent report from The Resolution Foundation found that almost two million people have not been able to work for six months during the pandemic, including 700,000 who had been unemployed for at least six months.

The grim job figures come ahead of Rishi Sunak’s planned Budget on 3 March where he is expected to announce fresh measures to shore up the economy.

But business chiefs have already called for a further extension of the furlough scheme beyond the proposed April end date and more financial support to avert further job cuts.

Speaking on Thursday, Adam Marshall, director general of the British Chambers of Commerce, said the Chancellor would be making a “huge mistake” if he chose to “pull the plug” on the support schemes too early.

And he warned that removing the support would be “akin to writing off the billions that have already been spent helping firms survive and preserving jobs”.

He told the BBC’s Today programme: “I liken this to a marathon. Businesses have been running it and they are in the 25th mile right now, they can see the finish line ahead.

“You want them to get over the finish line and then you want to get them an energy drink and a blanket to help them start to recover.

“That is why extending the scheme is so important. You don’t want them falling within sight of the finish line.”

By John Johnston

Source: Politics Home

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Furlough warning as redundancies among over-50s increase 240%

The number of redundancies among over 50-year-olds increased by 240% last year, new figures suggest.

The total rose from 35,000 at the start of 2020 to 121,000 by the end of the year, according to an analysis by Rest Less, which offers advice to older 50s.

Redundancy rates for the over 50s have climbed from 4.2 per 1,000 employees in January to March 2020 to 14.4 in September to November, said the report.

The study added that 25-34-year-olds have been hardest hit by redundancies so far.

Stuart Lewis, founder of Rest Less, said: “With businesses suffering in the wake of the pandemic, we knew redundancies were going to be high as furlough was originally scheduled to end last October.

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“Even though redundancy rates amongst the over 50s have never been this high, our concern is that there is worse still to come with more than 640,000 over 55s still on furlough.

“The biggest challenge for the over 50s is not redundancy or furlough rates, but rather it’s what happens when talented workers in this age group move from paid employment to job seeking status.

“The recruitment process is where age discrimination bites hardest, particularly at this time when the pandemic has exacerbated existing inequalities in the workplace.”

A Government spokesman said: “Older workers are a vital asset to this country and hugely employable, which is why our Plan for Jobs is delivering tailored support to help them back into work and retrain into new industries.

“We are increasing the number of frontline work coaches by 13,500, offering bespoke support to ensure people find a job that’s right for them, helping over 50s retrain on our sector-based Work Academy Programme, and our new £2.9bn restart scheme will see people across the UK who have been out of work for at least 12 months get back on the job hunt.”

By Neil Shaw

Source: Wales Online

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200,000 retail redundancies forecast for 2021

The UK’s retail sector is forecast to report 200,000 job losses this year as Covid-19 restrictions continue to affect the industry.

The latest research from the Centre for Retail Research (CRR) showed that an average of 320 stores were shuttered every week in 2020.

New figures show a bleak retail landscape for 2021, with high streets and shopping centres likely to be most affected by social distancing rules.

The CRR said the retail sector’s troubles are “caused by high costs, low profitability, and losing sales to online shopping”.

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“These problems are felt by most businesses operating from physical stores in high streets, shopping malls or neighbourhoods.

“The low growth in consumer spending since 2015 has meant that the growth in online sales comes at the expense of the high street.”

The third lockdown and tiered restrictions have impacted stores as a large proportion of retail trade has been lost.

“Although a lot of money has been channelled into the retail sector ‘to preserve jobs’, businesses cannot operate with zero revenue and constant threats of pandemic-driven closure,” CRR said.

By Sahar Nazir

Source: Retail Gazette

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How UK unemployment rates soared in 2020

THE UK’s unemployment rate soared during 2020 as some of the country’s largest businesses were forced to lay off hundreds of thousands of staff, with some of the biggest casualties in the retail, hospitality and travel sectors.

This year the PA news agency tracked nearly 280,000 announced redundancies or jobs that were put at risk since March 23, when the first lockdown started.

It is a clear demonstration of the cost to people of the economic chaos caused by coronavirus.

Some of the cuts, including 5,500 at Cineworld, are likely to be temporary, but the PA figures also hide a large number of job losses, many among smaller companies.

The Office for National Statistics (ONS) said this month that the number of employees on payrolls had fallen by 819,000, most of which were at the beginning of the pandemic.

According to PA’s analysis, June was the worst month, with nearly 75,000 redundancies or possible job losses announced. However, this included HSBC and BP, whose plans for 35,000 and 10,000 possible redundancies were global, and not just limited to UK jobs.

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The fewest number of job losses announced in a full month was in April, shortly after lockdown started on March 23.

Retail jobs were the hardest hit, according to PA’s analysis, with more than 85,000 potential redundancies. Hospitality and travel companies both announced more than 42,000 losses.

The Bank of England said in November that it expected unemployment to peak at 7.75% next year, far ahead of the current 4.9%.

The Government hoped its furlough plan would save jobs, and has paid £46 billion to cover up to 80% of the salaries of 9.9 million people at some point. But between August and October, as the scheme was being phased out, redundancies reached a record high, at 370,000 in that quarter alone.

The furlough scheme, which was meant to come to an end in the autumn, was extended until April as more restrictions hit the economy.

A Government spokeswoman said: “We have put in place one of the world’s most comprehensive economic responses, spending over £280 billion to protect jobs, incomes, and business throughout the pandemic.

“Our Plan for Jobs continues to support people of all ages to get back on the jobs ladder, levelling up the nation as we build back better. We’re doubling the number of Work Coaches across our jobcentres ensuring those in need have access to bespoke support, creating hundreds of thousands of opportunities for young people through our Kickstart Scheme and our SWAPs (sector-based work academy programmes) are helping people retrain for new industries.”

By Richard Browne

Source: Bridgwater Mercury

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UK jobless rate rises again, redundancies hit record high

UK jobless rate rose again in the three months to October and redundancies reached a record high as companies were hit by new coronavirus restrictions and prepared for the end of government job subsidies that were eventually extended into 2021.

Official data showed the unemployment rate reached 4.9%, up from 4.8% in the three months to September, its highest in more than four years.

However, the increase was smaller than expected by most economists. A Reuters poll had forecast a jump to 5.1%.

The number of redundancies reached a record high of 370,000 in the August-to-October period, although it decreased in October alone, the Office for National Statistics said.

“Overall we have seen a continuation of recent trends, with a further weakening in the labour market,” said Darren Morgan, ONS director of economic statistics.

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For much of the period covered by Tuesday’s data, finance minister Rishi Sunak rejected calls to extend his broad job- retention scheme beyond a scheduled Oct. 31 expiry, raising fears of an acceleration in job losses.

But, as a second wave COVID-19 cases hit, Sunak was forced to extend the scheme until the end of March 2021.

“The … extension of furloughing will provide a lifeline for many jobs over the difficult winter months, but the big question is what happens after,” said Tej Parikh, chief economist at the Institute of Directors.

The introduction of vaccines offered some hope, but hiring plans remained stuck in neutral, he said, calling for new measures to help job creation, such as a social security contributions cut.

The Bank of England has forecast that the unemployment rate is likely to peak at nearly 8% in the second quarter of 2021.

The Arcadia fashion group fell into administration late in November putting more than 13,000 jobs at risk, and retail chain Debenhams is closing all its shops, jeopardising 12,000 jobs.

As well as COVID-19, Britain’s economy faces the risk of a shock from the end of its post-Brexit transition period on Dec. 31. London and Brussels remain locked in negotiations little more than two weeks before the possible introduction of tariffs and other barriers to trade with the European Union.

Tax office data showed the number of staff on company payrolls slipped by a monthly 28,000 in November, taking the total number of job losses since February, according to the payrolls measure, to 819,000, a third of them in hospitality.

Job vacancies rose to 547,000 in the three months to November, about 60% higher than during the depths of the pandemic slump but down by about a third from a year earlier.

Reporting by William Schomberg

Source: UK Reuters

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Nearly 10k job losses expected on ‘Black Monday’

Almost 10,000 people are expected to be made redundant today, on what outplacement firm Randstad RiseSmart is calling ‘Black Monday’.

Based on its experience of the outplacement market, it said 7 December 2020 was likely to be the worst day of the year for job losses in the UK, as many organisations cut back ahead of the new year. It expected 9,550 redundancies to be announced.

“The economy is set to shrink 11% this year, the most it has done since Queen Anne sat on the throne 300 years ago. Not only that, but businesses are starting to deal with the medium term economic fallout of the pandemic – grappling with the fact that the economy may not recover to pre-pandemic levels until 2027,” said Simon Lyle, UK managing director of Randstad RiseSmart.

“While the first week of December is always a bad time for layoffs, the economic outlook means employers will be making more redundancies than ever this year. And this isn’t just the big name retailers we’ve seen so much of in the news – this is all sorts of businesses, across different sectors – who are having to make some very difficult decisions.”

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Its grim prediction came as the Department for Work and Pensions revealed more than 40,000 people – 800 per day – have been referred to its new Job Entry Targeted Support (Jets) scheme in its first two months.

The scheme, which was announced by chancellor Rishi Sunak at the beginning of October, is especially targeted at those who had lost their jobs as a consequence of the Covid-19 pandemic.

People who have been claiming Universal Credit or Job Seekers Allowance are given advice on how to move into “growing” sectors, was well as support with CV-writing and interview techniques. Those who have been out of work for at least three months are given an action plan to follow and are signposted to opportunities for skills development.

Employment minister Mims Davies said: “Many people are sadly facing unemployment due to the pandemic, for the first time in years, and will need help to build their confidence, get back on their feet and apply for new roles – Jets gives people the tools and support they need to succeed.

“During such a challenging time, our new employment support is already helping thousands of jobseekers to get back into work and I’ve met with Jets providers to see first-hand the vital help this programme has already given people across the UK.

“Our Plan for Jobs is supporting people of all ages – we’re doubling the number of work coaches across our Jobcentres, creating thousands of opportunities for young people through our Kickstart scheme and our SWAP scheme is helping people retrain in new industries.”

In the three months to September, redundancies reached a record high of 314,000 according to the Office for National Statistics.

Thousands more jobs on the high street have recently been put at risk with the announcement that Arcadia Group, Bon Marché and Peacocks and Jaeger owner Edinburgh Woollen Mill Group had appointed administrators. Debenhams also planned to close its doors, but Mike Ashley’s Fraser’s Group confirmed today it was in talks to rescue the struggling department store chain.

By Ashleigh Webber

Source: Personnel Today

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