ONE-IN-FIVE companies are planning to sack workers in response to yesterday’s cut in furlough payments, a British Chambers of Commerce (BCC) survey has found.
From yesterday government payments were reduced to 60% towards the salaries of furloughed workers, with employers expected to pay 20%.
According to the most recent figures up to 30 June, about 1.9m workers were on furlough, down from a peak of 5.1m in January.
The government said 11.6 million workers have had 80% of their wages paid by the government since the Job Retention Scheme was launched in April 2020, with the bosses having to pay nothing.
Since the scheme was launched, millions of workers have been sacked or had their pay slashed through ‘fire and rehire’.
Since 1 July this year, employers have been asked to contribute 10% towards the wages of furloughed workers for hours their staff do not work.
That amount has now risen to 20% during August and September and then it is to end on 30th September, with the mass sackings floodgates set to open.
The British Chambers of Commerce surveyed 250 businesses, with 18% saying they were likely to make staff redundant in response to the change to furlough.
A quarter said they would aim to reduce hours or move staff to part-time working patterns.
Jane Gratton, the BCC’s ‘head of people policy’, said the change ‘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’.
She said it is ‘crucial’ that employers and the government give returning furloughed workers the support and training they need ‘to be re-engaged and productive’.
Hannah Slaughter, an economist from the Resolution Foundation, said that over the majority of the pandemic, the highest rates of furlough was among the under 25s, but the most recent data it was the over 60s who were more likely to be furloughed.
‘That’s concerning because we are likely to see a rise in unemployment when the Job Retention Scheme ends in the autumn and any workers who are left on furlough are more likely to become unemployed,’ she said.
She said older people are more likely to leave the workforce when they lose their jobs and those who return in a new job are ‘more likely to face a pay penalty’ relative to younger workers.
Making businesses pay more to furloughed staff could push them ‘off a cliff edge’, unions warned.
Wales TUC said that ‘half of all staff in travel agencies are still on furlough’.
‘We do feel that doubling the employer contribution is too much too soon, and puts jobs at risk in some parts of the economy.’
TSSA General Secretary Manuel Cortes said: ‘Any cuts to the furlough scheme will be like kicking people when they’re already down.’
‘With no structured plan to provide the extra support, we are likely to see more travel agencies go under.’