Winding down furlough creating 'unnecessary harm'

Unite has called on the government to extend and adapt the furlough scheme as new research shows hundreds of thousands of viable jobs could be at risk as the scheme winds down.

The study from the New Economics Foundation (NEF) found that up to 250,000 viable jobs are at risk of being axed from this month, when the government now requires employers to contribute 20 per cent to the cost of the scheme.

Until July, employers did not contribute to the scheme at all, with the government paying for 80 per cent of the wages of furloughed workers. The NEF estimates that the quarter of a million jobs will be at risk because the furlough scheme would no longer be a ‘cost-effective’ option for struggling employers.

The NEF analysis estimates that a further 660,000 jobs could go in October, when the scheme is slated to end altogether. This is because in many industries, like travel, arts and hospitality, demand will not return to pre-pandemic levels despite Covid restrictions being lifted.

Commenting, NEF senior researcher Alex Chapman said, “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers.

“Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the Delta variant,” he added.

The NEF’s latest analysis reflects a separate survey conducted by the British Chambers of Commerce (BCC), where one in five employers said they had plans to cut jobs from this month as the furlough scheme winds down.

According to the most recent figures, 1.9m still remain furloughed, down from a peak in January of more than 5m. Overall, the furlough scheme – also known as the Coronavirus Job Retention Scheme – has supported nearly 12m people since the pandemic began.

Unite has called on the government to think again about ending the furlough scheme in October.

Unite’s assistant general secretary for manufacturing Steve Turner, who helped negotiate the furlough scheme, said, “When we negotiated furlough I said to the government that it would more than prove its value by protecting jobs, incomes and skills, especially for strategic sectors like manufacturing, something which has demonstrably been the case. 

“It is far better to retain workers through temporary crises, dips in demand and technological transformation such as we are seeing now with the greening of our economy, than to lose them altogether, along with the skills and knowledge they possess, and allowing unemployment to rise,” Turner added.

“That’s why I am calling on the government not to scrap the scheme altogether but to adapt it,” he continued. “Reform it into a short-time working scheme, like they have in Germany and many of our competitor countries, to support critical sectors like manufacturing through peaks and troughs, serious supply chain problems and the transition to a greener future that’s now underway.

“We’re not out of the woods yet with this pandemic and the autumn could see another rash of cases and further disruptions.

“That’s why I am urging ministers not to waste the good work that’s been done, or to miss a fantastic legacy that can develop from furlough,” Turner went on to say. “To pull the rug from under the feet of business and workers now will dent the confidence needed for businesses to invest and adapt operations at this critical time as we try to recover and rebuild the economy.

“It is hard to comprehend the motivation for or sense in ending both the furlough scheme and snatching back £20 a week from hard working people on universal credit on the same day.  It’s a double whammy and could make September 30, a very bleak day for workers, their families and communities.”

By Hajera Blagg