A recent Freedom of Information request revealed that since April, UK employers have planned around 498,000 redundancies, demonstrating the harsh economic impact of the ongoing coronavirus crisis on the labour market.
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The figures indicate that 58,000 job cuts were planned in August, greater by 150% than the previous year’s figure. Also disclosed was that 966 separate employers planned to make at least 20 employees redundant in August when during the same month last year, this number was only 214. This represents more than a fourfold increase in the number of planned redundancies.
June and July were the hardest hit months, with employers planning for around 150,000 job cuts. The companies that announced the most significant redundancy plans were from the hardest-hit sectors such as retail, hospitality, and entertainment. Some of the companies that have announced extensive job cuts include WH Smith, Pret a Manger, and Marks and Spencer, among others.
Redundancy planning is required months in advance since the process can take months to complete. Any businesses planning for a significant number of job cuts by the end of furlough would have had to notify the government in the summer. The spike in redundancies in June and July is likely to have been caused by companies preparing to cut staff before the furlough scheme winds down at the end of October.
While the August figures show a slight recovery versus the previous months, it still paints a rather bleak picture for the recovery of the UK economy. Many employees have returned to work, and consumer demand has somewhat recovered as a result of schemes such as Eat Out To Help Out. However, employers are still struggling to regain profitability, given the reduced footfall as a result of local lockdown restrictions.
Amidst these harsh times, the government’s planned winding up of the furlough scheme is anticipated to put further pressure on employers. The furlough scheme, which supported the livelihoods of 9.6 million employees, is being replaced in favour of the less generous Job Support Scheme, under which the majority of employee wages is now expected to be shouldered by employers.
For thousands of businesses still not in the clear, financially speaking, the removal of government support is likely to exacerbate their economic woes, leading to further redundancies.
Rebecca McDonald, a senior economist at the Joseph Rowntree Foundation, voiced her concerns, stating, "Many employers will have difficult decisions to make in the coming months. Given the design of the new scheme it seems likely that there will be a significant number of redundancies in the winter.”