The devastating toll of the COVID-19 pandemic on businesses continues to be felt around the country, the latest impact being rising redundancies. A significant increase in calls to redundancy helplines has been seen recently. This increase indicates that despite the government's best efforts to keep businesses afloat, several continue to struggle with maintaining the livelihoods of their employees.
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Conciliation service Acas reports that calls about redundancy in June and July rose by almost 170% year on year. Citizen's Advice also confirmed that around a third of all calls at present are about redundancy.
The government has committed to assisting employers looking to preserve jobs, through the furlough scheme, hiring grants, and other financial support measures. However, some of these schemes are set to taper off in the coming weeks. This has caused concern among business owners.
One such measure set to wind down from this month is the furlough wage subsidy scheme, under which the government has paid out 80% of the wages of furloughed workers, up to a maximum of £2,500 per month, since March. From next week onwards, businesses taking part in the scheme will have to make national insurance and pension contributions. September onwards, they will also need to pay 10% of wages, increasing to 20% from October.
To stem the number of redundancies that will likely follow this tapering off, Chancellor Rishi Sunak additionally announced businesses will be paid a bonus of £1,000 for each employee they retain until 31 January 2021.
However, a survey of 500 businesses conducted by the British Chamber of Commerce (BCC) indicates that only around 43% of companies would avail themselves of this scheme. Many companies are still in too precarious of a financial position to continue paying employees after the furlough scheme winds down.
Additional data from the BCC indicates that other schemes, like the kickstart scheme, which is targeted towards providing funding for placements for younger job applicants, would also only be partially effective at promoting hiring. Only around two-thirds of the firms surveyed by the BCC were aware of this scheme at all, with another 65% saying that they were unlikely to make use of these grants to hire apprentices.
This lukewarm reception indicates that despite their best intentions, the government continues to miss the target when it comes to assuaging the fears of business owners over their future sustainability.
It can be argued that as a top priority, employers are more concerned about maintaining steady cash flows during the crisis than focussing on recovery.
Additionally, growing pressure on the government to extend the furlough scheme beyond October indicates at least some of these measures have provided relief to employers facing severe economic pressure during this challenging time.
The BCC has urged the government to rethink the deadline for tapering off economic support, warning them of the risk of a dramatic increase in job losses should they continue as planned.