A minority of UK employers could be about to cut jobs, due to the withdrawal of the furlough scheme and rising costs.
The scheme, which has protected around 11.6 million jobs since the start of the pandemic, will close on 30 September 2021. The Government currently pays 60% of a furloughed worker’s wages and employers will pay 20%, plus workplace pension and National Insurance contributions.
By making furlough more expensive for employers, the Government hopes to encourage them to take workers back full-time, if they can. Some employers with workers on furlough might find that they cannot afford to keep them on as business returns to normal from 1 October 2021. As a result, research from the British Chambers of Commerce (BCC) found that 18% of UK employers plan to make redundancies before the end of the year.
Jane Gratton, head of people policy at the BCC, said:
“This will likely result in employers, who are still struggling to recover from the recession, being forced to make redundancies and cuts to working hours.
“Whether furloughed workers are returning to the workplace or the wider labour market, it is crucial that employers and the Government give the support and training they need to be re-engaged and productive.
“Alongside rapid retraining opportunities, the Government should extend the kickstart scheme into 2022, and expand it to enable older workers to gain new skills and experience.”
The kickstart scheme was launched in September 2020 and pays the wages and associated employment costs for businesses taking on 16 to 24-year-olds in receipt of universal credit for up to six months. While that scheme has yet to be extended at the time of writing, the Government has launched a new flexible apprenticeship scheme for the agricultural, construction, and creative sectors. Organisations in these industries can apply for grants of between £100,000 and £1 million to set up new flexi-job apprenticeship agencies before the end of 2023/24.
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