British employers are beginning to acknowledge the unavoidability of difficult decisions such as axing staff to navigate an unforgiving labour market, as the UK government hastens to restart the country’s COVID-19 pandemic-battered economy.
Amid an easing of lockdown rules and touted schemes such as Eat Out to Help Out to support local restaurants, cafes and pubs against the backdrop of warnings over a potential second wave of coronavirus outbreak, the looming wind down of the furlough scheme is fraught with potentially grim reality.
As Chancellor of the Exchequer Rishi Sunak announced that government support for the jobs retention scheme is decreasing, due to end in October, the cutoff date is being viewed by many as a cliff edge, with increasingly more workers facing the prospect of joining the tens of thousands who have already lost their jobs due to COVID-19.
Launched in March, when the crisis hit the UK, the wage-subsidy scheme has kept up to nine million people in work.
The measure had the government covering up to 80 percent of staff salaries, up to a cap of £2,500 per month for the time they were being furloughed.
From 1 September this grant will reduce to 70 percent and then to 60 percent from 1 October, with the employer in each case paying the balance to make up the 80 percent, to gradually support the transition back to work.
Amid the latest predictions of unemployment in the country potentially spiking to 10 percent by the end of the year, Pizza Express warned that 1,100 jobs might be on the chopping block, as it mulled closing up to 15 percent (67) of its restaurants, reports the Daily Mail.
Currys PC World revealed plans to dismiss around 800 staff to save money.
Administrators at burger chain Byron were cited as admitting a last minute sale will render 651 employees redundant.
Wetherspoons, a chain of pubs and hotels across the whole of the UK and Ireland, revealed plans to axe 130 head office roles due to the impact of the health crisis on the hospitality sector.
Hays Travel hinted it would be forced to dismiss 878 out of 4,500 staff over the government’s last minute ban on travel to Spain. It also cited the impending changes in the furlough scheme.
Adding to the jobs bloodbath, Dixon’s Carphone, a British multinational electrical and telecommunications retailer and services company headquartered in London, has already slashed 800 store management jobs.
On 7 August British Airways, which used the government’s scheme to furlough 30,000 staff until the end of May, announced more than 10,000 job cuts.
British retailing and fitness business DW Sports collapsed into administration earlier in the week, putting 1,700 jobs at risk.
Despite the UK Treasury's pledge to pay employers who retain their staff until January 2021, in June the National Institute of Economic and Social Research (NIESR) slammed the winding down of the furlough scheme as a “mistake” that will cost 1.2 million jobs.
#COVID19 UK's unemployment rate (white line) and jobless claims (yellow line), chart @BloombergTV https://t.co/hUImQCXNSm pic.twitter.com/V3RjfwzgUE
— ACEMAXX ANALYTICS (@acemaxx) August 6, 2020
The National Institute of Economic and Social Research (NIESR) had previously put paid to hopes of a v-shaped recovery in the country’s economy, warning that the UK was unlikely to return to pre-pandemic levels until the second-half of 2023.
The same think thank suggested unemployment might soar from 1.3 million to 3 million by the end of 2020, and advised that extending the furlough scheme beyond October might potentially reduce unemployment in the next four years.
