Around 25% of all workers who have been put on the government’s furlough scheme, could be facing unemployment when the government ends its Job Retention Scheme
A survey of 2,000 UK businesses carried out on behalf of the London-based lender MarketFinance Ltd found that almost 25% of them plan to cut jobs after the furlough scheme has ended.
The Coronavirus Job Retention Scheme was introduced on the 20th of March and has seen that the government pays workers 80% of their wages, up to the amount of £2,500 a month.
Chancellor of the Exchequer, Rishi Sunak, has recently announced that a shake-up to the furlough scheme will start to be implemented, which will from August see that employers are paying a portion of their workers’ wages at an increasing rate until the Job Retention Scheme is stopped at the end of October.
From August employers will be required to start paying national insurance and pension contributions for their workers, and then from September onward they will have to pay those contributions, as well as 10% of salaries.
From October companies will have to start paying those contributions plus 20% of salaries, following which the scheme will finally end on the 31st of October. But according to the survey, around 45% of companies will bring back as many as half their furloughed staff in July.
Health leaders in the UK have called for a “rapid and forward-looking assessment” of the state of national preparedness for a second wave.
The Office for National Statistics estimates furlough is costing the government around £8 billion a month. Boris Johnson announced this week that a number of lockdown measures would be eased at the beginning of July in a bid to help the UK economy.
This will allow pubs and restaurants in England, as well as hotels, hairdressers, museums and cinemas to begin re-opening on the 4th of July, which some MPs are calling ‘Super Saturday’.
He stressed this would help revive the economy and move the country towards a ‘new normal’.
He told MPs that given the ‘significant fall in the prevalence of the virus’, the two-metre social distancing rule can be cut to ‘one-metre plus’.
This comes after people in Scotland will be permitted to meet up with two other households indoors, starting from the 10th of July and pubs and restaurants can re-open from the 15th of July.
Members of the Labour Party have warned Chancellor Sunak that the Treasury’s one-size-fits-all approach to ending the furlough scheme risks a period of mass unemployment, that they say will reverse much of the good done by the Job Retention Scheme.
Anneliese Dodds, The shadow chancellor, called on Sunak to use his summer statement next month to put in place an extension to the financial support to vulnerable sectors beyond the October deadline for winding up the scheme.
“The government’s one-size-fits-all approach to support schemes makes no sense – it treats industries that can open today and industries that can’t exactly the same.”
“We have repeatedly urged the chancellor to adopt a sectoral approach to economic support. This should include introducing the employer contribution at a slower rate for those sectors which have been hardest hit – not least because the promised sector deals are still yet to materialise.”