LONDON: Extra training is required to deal with the “many thousands” of redundancies being predicted as furlough support tapers off, the British Chamber of Commerce has said.
A survey of businesses found that one in five firms plan on letting staff go in response to Sunday’s furlough policy change, which will see employers asked to contribute 20 per cent towards the salaries of those whose wages are currently being subsidized by the state.
The furlough scheme has seen staff whose jobs have been put on hold during the coronavirus pandemic guaranteed 80 percent of their salaries – to a limit – from the government.
The support is slowly being made less generous as the Treasury prepares to end the scheme by October.
In July, employers had to pick up 10 per cent of their employees’ salaries, while government support dropped from 80 per cent to 70 percent.
Starting on Sunday, this will be reduced further to 60 per cent, with employers picking up 20 percent of the furlough pay in August and September.
The British Chamber of Commerce (BCC) is warning that the latest reduction in furlough aid will lead to thousands of job losses and is calling on ministers to ensure those impacted can retrain.
Official data shows that 1.9 million people were still furloughed by the end of June, a reduction from 2.4 million a month earlier.
HM Revenue and Customs data released last week stated that those in the 65 or over age band made up the highest proportion of staff still on furlough, raising concerns some older workers could find it hard to source new employment, the chamber said.
Jane Gratton, head of people policy at BCC, said: “Today’s changes to the furlough scheme 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.” Out of 250 businesses with employees still on furlough, 18 per cent told the chamber they were likely to make staff redundant in response to being asked to contribute up to 20 per cent of their furloughed staff’s wages.
A quarter said they would aim to reduce hours or move staff to part-time working patterns. A little under 15 per cent said they would have to cancel investment plans but, in better news for the British workforce, almost 40 per cent said the change would have no impact on the business.
The fieldwork for the chamber’s research took place between July 5-23, with businesses who contributed having at least one staff member on furlough at the time, a spokesman said.
A government spokesman said: “As the economy rebounds, it’s right that furlough support is tapered, so that we can focus support elsewhere. We’ve always been clear that it’s not possible to save every job, but our Plan for Jobs is helping people of all ages find the skills they need to get back into work, including through the Restart Scheme, the sector-based work academy programme, and our Job Entry Targeted Support scheme.”