Extend furlough scheme to vulnerable sectors or face more job cuts

The UK could endure a second wave of job cuts and a loss of skills if the furlough scheme is not extended for sectors hardest hit by COVID-19.

This is according to the manufacturing body, Make UK, who found that 62 per cent of manufacturers surveyed either agree or strongly agree that the Job Retention Scheme (JRS) should be extended beyond October.

Under a fifth (17 per cent), said the furlough scheme should be extended for any business, with 18 per cent saying another support scheme should be set up to replace furlough once it ends.

Thus far, both Prime Minister Boris Johnson and Rishi Sunak, Chancellor of the Exchequer have ruled out any extension to the scheme. When the furlough scheme, was first launched, the Government would pay 80 per cent of an employees’ wages, from September the staff members company had to pay 10 per cent of that figure and from October 20 per cent.

Jacob Nell and Bruna Skarica, two Morgan Stanley economists have predicted that the Government will extend the scheme. However, it will be “less generous and more targeted”. Germany, France and Austria have either extended their support to the job market or created a new form of relief for employees during the pandemic.

Back in July, HRreview reported that the National Institute of Economic and Social Research (NIESR), an independent economic research institute, believes closing the furlough scheme at the end of October could result in unemployment reaching 10 per cent this year.

Stephen Phipson, chief executive of Make UK, said:

The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running. Ensuring that those sectors which are at the forefront of technology and will provide the growth sectors and high skill jobs in recovery should receive the greatest support possible.

The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest. Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so.

Dame Carolyn Fairbairn, the director-general of the Confederation of British Industry (CBI) had admitted that the scheme has been very expensive but “an absolute lifesaver” and that businesses need more support.

Dame Fairbairn said:

Many companies will find that cliff edge very difficult to manage… it’s too soon to pull business support away at the end of October.

The director-general of the CBI thinks a new support scheme should be put in place, which does not pay out as much as the furlough programme and be targetted towards companies who are in dire need of assistance.

To avoid a surge in joblessness once the furlough scheme concludes, the Trades Union Congress (TUC) has put together the New Jobs Protection and Upskilling Plan which urges the Government to help those at risk of losing their job to develop new skills that they will need in the future. It also notes that younger employees face bigger disadvantages at times like this, and so developing new skills is essential.

The Plan also focuses on new short-time working being offered to workers to help reduce the risk of huge unemployment levels. Short-time working is when a staff member agrees to work for reduced hours and pay.