One in five firms planning staff redundancies as Covid furlough support tapers off

By Helen Johnson
Sunday, 1st August 2021, 10:50 am
A survey of businesses found that one in five firms plan on letting staff go in response to the furlough policy change (Photo: Shutterstock)

“Many thousands” of redundancies are being predicted as furlough support tapers off, with extra training required in response to this, the British Chamber of Commerce (BCC) has said.

A survey of businesses found that one in five firms plan on letting staff go in response to the furlough policy change.

The furlough scheme has seen staff whose jobs have been put on hold during the Covid pandemic guaranteed 80% of their salaries from the Government

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However, recent changes to the furlough scheme will see employers being asked to contribute 20% towards the salaries of those whose wages are currently being covered by the state.

The support is slowly being tapered off as the Treasury prepares to end the scheme by October.

In July, employers had to pick up 10% of their employees’ salaries, while Government support dropped from 80% to 70%.

This will be reduced further to 60% from Sunday 1 August, with employers picking up 20% of the furlough pay in August and September.

Out of 250 businesses with employees still on furlough, 18% told the chamber they were likely to make staff redundant in response to being asked to contribute up to 20% of their furloughed staff’s wages.

However, a quarter said they would aim to reduce hours or move staff to part-time working patterns.

‘Others will need to retrain for opportunities in a different sector’

The BCC is warning that the latest reduction in furlough aid will lead to thousands of job losses and is calling on ministers to ensure those impacted can retrain.

Jane Gratton, head of people policy at 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.

“Alongside rapid retraining opportunities, Government should extend the Kickstart scheme into 2022, and expand it to enable older workers to gain new skills and experience.”

A Government spokesman said: “Our Plan for Jobs is working, and has supported the livelihoods of workers throughout the pandemic with two million fewer people expected to become unemployed than forecast last year.

“We deliberately went long with our support, with furlough in place all the way through to the end of September, and three million workers coming off the scheme since March.

“As the economy rebounds, it’s right that furlough support is tapered, so that we can focus support elsewhere.

“We’ve always been clear that it’s not possible to save every job, but our Plan for Jobs is helping people of all ages find the skills they need to get back into work, including through the Restart Scheme, the sector-based work academy programme, and our Job Entry Targeted Support scheme.”