Yahoo Finance 700,000 jobs cuts feared as furlough scheme ends
The country is heading for the highest level of redundancies since the Nineties, fresh data have shown, as the furlough scheme draws to a close.
The Institute for Employment Studies estimated there will be 450,000 job losses in the coming months and warned the toll could exceed 700,000 if employers continue to slash jobs.
Some of the country’s largest companies have announced thousands of cuts since the pandemic hit including Marks & Spencer, John Lewis, British Airways and Pizza Express.
Between May and July 2020 alone, firms notified the Government of nearly 380,000 staff at risk of redundancy, more than twice as many as at the height of financial crisis in 2009.
The taxpayer-funded jobs retention scheme comes to an end next month, stoking fears that many more Britons will be out of work if cash-strapped firms cannot pay them because of the impact of coronavirus.
Echoing IES’s findings, data from NatWest showed that employment continued to fall across the board in August despite the economy continuing to grow.
The rate of staff cuts accelerated in eight areas, including Yorkshire, which was the worst-performing region after employment fell sharply. In contrast, the slowest reduction was in Scotland, with the rate of decline easing to the weakest since February.
In June, 1,778 firms said they were intending to cut more than 139,000 jobs in England, Wales and Scotland. Last year, only 345 firms had plans to cut 24,000 jobs. The unemployment figures remain complex, however, as many people have stopped working but have kept their jobs for now while on furlough.
“While recoveries in output and demand are under way, this is yet to translate into any real improvement on the employment front,” said Sebastian Burnside, NatWest chief economist.
“Even with the government furlough scheme taking some of the pressure off businesses, we’re still seeing round after round of job cuts all across the UK. The worry is what will happen once that support is withdrawn over the coming months.”
IES director Tony Wilson admitted that the scale of the job crisis in the UK “sadly cannot be averted entirely”, and called on the Government to put new measures in place to mitigate some of the redundancies.
“The best way to do this would be to reduce labour taxes, by raising the threshold at which employers pay National Insurance,” he said.
Separately, UKHospitality, representing pubs, restaurants and hotels, has written to the Chancellor warning that the industry faces thousands more jobs lost because they cannot yet afford to pay rent.
It has asked for an extension of a measure introduced at the peak of the crisis designed to prevent landlords from kicking out tenants that cannot pay the bill.
The moratorium expires this month.
Employers have to notify the Insolvency Service ahead of any significant job cuts that involve more than 20 staff. Because of this the actual number of people out of work tends to be higher, the IES believes.
During the peak of the last recession, 180,000 staff were identified as being at risk of redundancy between January and March in 2009. Actual redundancies recorded by the Labour Force Survey peaked at 306,000 that year, putting job losses this autumn on track to be the highest since the LFS started counting them in 1995.
