Furlough success! As fewer firms plan job cuts in 2021

(c) Shutterstock / Novikov Aleksey

Before even making his Budget announcement last week, Rishi Sunak had already unveiled plans to further extend the furlough scheme until September. This will come as a huge relief to lots of businesses who might have had to let members of staff go had the scheme ended as was planned in April. This important news comes just weeks after the BBC reported that the fewest number of British employers, just 292 firms, were planning job cuts in January. These are the lowers figures since the pandemic began, despite a third lockdown across the UK forcing many of our businesses to close their doors!

“This seems to suggest that the extension of the furlough scheme from 31 October to 30 April has been effective in preventing another surge in job losses”

Ruth Gregory, senior UK economist as Capital Economics.

These figures strongly suggest that the extension of the scheme, also known as the ‘Coronavirus Job Retention Scheme’ – which was first put in place by the Government in the midst of the first lockdown and has been extended multiple times as the pandemic has gone on – has been successful in preventing a huge amount of job losses. The scheme was last extended from the end of October to April, and has seen nearly 10 million people furloughed between the start of the scheme and 13 December.

As the UK prepares to slowly exit the third (and hopefully final!) lockdown within the next few weeks, a further extension of the furlough scheme until September is great news for businesses up and down the country. Whilst lots will be able open their doors and go back to work on April 12, there are many – such as those in the hospitality industry who, for example, don’t have access to an outdoor area – that will not. This means that furlough is vital in protecting hospitality jobs over the next few weeks as these companies wait until they can open again. It will also allow businesses to reopen in the safest possible way – some might not be capable of bringing all staff members back straight away due social distancing rules and other restrictions. There could even be those who quite frankly can’t afford to bring back every member of staff immediately due to the hard-hitting effects of the last year. For all these scenarios, furlough is the key to preventing job losses and loss of income for workers in sectors than cannot afford their wages at the present time.

“Our package for support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country”

Rishi Sunak, Chancellor of the Exchequer

The pandemic and subsequent lockdowns of last spring and summer caused the number of redundancies to absolutely sky rocket. In June and July of last year, the number of jobs at risk was about 150,000 – the largest increase of redundancies on record. Data from the ONS reported a further 395,000 redundancies between September to November (these figures are based on a survey that asked people if they’d been made redundant within the previous three months meaning some of these jobs could’ve been lost back in July). As reported again by the BBC in January of this year, ONS weekly estimates suggested that redundancies were at their highest in September and have been slowly declining since.

Hopefully this data, which is a strong champion for the success of the Coronavirus Job Retention Scheme, means that as the year continues and our businesses start to reopen their doors we can anticipate fewer jobs being considered ‘at risk’ and less employees in industries such as hospitality and retail (which have been the worst hit sectors in terms of job losses) being made redundant.

Furlough success! As fewer firms plan job cuts in 2021
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