New data shows that the Chancellor’s extension of the Coronavirus Job Retention Scheme (also known as the furlough scheme) has had a large impact on businesses, with last month seeing the lowest number of planned redundancies since coronavirus lockdowns began.
According to new data released by the Insolvency Service, November saw the lowest number of planned lockdowns as figures dropped to 36,700. This is in comparison to peak figures in June which hit 156,000.
Earlier this year, it was initially announced that the furlough scheme would end at the start of November. However, this was then pushed to December due to the national lockdown. Since then, the scheme has been extended twice – first until the end of March and most recently, until the end of April 2021.
However, the most recent lockdowns did not see a spike in redundancies unlike the first one in the Spring of this year.
In comparison to the previous year’s figures in November, the number of planned redundancies were up by 32 per cent but significantly reduced compared to peak figures.
Furthermore, when analysing statistics that outlined employers who were planning to make 20 or more redundancies, this number also hit peak levels in June reaching around 1900.
However, only 550 employers stated their plans to make redundancies last month. Although this is an 80 per cent rise from figures last year, it is the lowest number since April of this year.
It is important to note, however, that any employers who are making less than 20 redundancies do not have to inform the Government, meaning the number of employers that are cutting jobs is likely to be much higher. Furthermore, closures of huge brands such as Debenhams were likely too late to be included within these figures.
Ruth Gregory, senior UK economist at the Capital Economics consultancy, said:
[This provides] encouragement that there will be a steady trickle, rather than a tsunami, of job losses over the next few months. [This data suggests] the government’s furlough scheme has minimised the labour market damage from Covid-19 so far.
However, when the extension of the furlough scheme was first announced, many noted that the news came too late to prevent redundancies. Speaking about the furlough extension, Fergal Dowling, partner and Head of Employment at law firm Irwin Mitchell, said:
It may mean that some employers will delay their redundancy exercises and although this should be welcomed, many organisations will be frustrated by the last minute nature of the decision and the fact that it will be too late for some.
The CIPD also recently wrote a letter to the Chancellor to recommend that the furlough scheme should be extended until the end of June, with phasing out happening slowly rather than all at once. According to the body, this extension would “protect millions of jobs and give businesses the certainty they need over what will be a very difficult winter”.
*This data was obtained by the BBC after a Freedom of Information request was submitted.