ONE in three firms are preparing to lay off staff before the furlough scheme topping up worker’s pay ends in October, a new report warns.
The British Chamber of Commerce said that an “historic cash crunch” is pushing businesses to tighten up their budgets and let staff go as the country struggles to recover from the lockdown.
According to poll done of 7,400 businesses by BCC and TotalJobs, 29 per cent of businesses expect they will have to make job cuts in the next three months – the highest number on record.
The revelations stoke fears the Chancellor’s furlough scheme has only been masking widespread job losses in Britain.
But as many as 59 per cent of businesses will keep their staff on after Rishi Sunak offered to pay £1000 for each furloughed worker that is brought back to work until at least January.
Only 12 per cent of firms are looking to increase the size of their workforce.
Mr Sunak extended the furlough scheme, but employers will need to start to make pension and national insurance contributions from next month.
From September businesses will have to pay 10 per cent of their staff’s wages, with the Government scaling back their support from 80 per cent to 70 per cent.
By October they will be asked to pay 20 per cent with a 60 per cent contribution from the Government.
The job losses will be felt most in bigger firms – around 41 per cent of large firms with over 250 employees expect to make lay offs, compared to 18 per cent of micro firms with fewer than 10 employees.
The percentage of firms actively trying to bring on new employees dropped to the lowest level on record at 25 per cent.
Since the lockdown began in March there are 649,000 fewer people in jobs, according to new figures by the ONS.
The number of actual hours worked by employees between March and May this year was down by 175.3 million – or 16.7 per cent – to 877.1 million hours, the biggest drip since estimates began in 1971.
Business Secretary Alok Sharma said this morning: “The figures out there, that is individuals who will be finding it very difficult at this time.”
But he said the Treasury’s coronavirus schemes – included the furlough scheme – has helped save jobs.
He said: “There is support out there. But I completely acknowledge this is going to be a very difficult time for lots of people out there who are facing a huge amount of worry.”
The job losses also makes the Government’s challenge of getting to spend money on British restaurants, pubs and shops to bolster the economy all the more difficult.
Boris Johnson is gearing up to announce his plan to get people back into offices and onto public transport to help people behave and spend more normally.
The public will be advised to still avoid using public transport during peak rush hour times of 7-9am, which will still be categorised as “essential travel only”.
Instead the public will be told to use public transport outside of rush hours – between 9am and 4pm and after 8pm and encouraged to walk and cycle if at all possible during peak times.
A Whitehall source said: “We are looking at the messaging – it will look at grading the times people travel.
“There is a lot of extra capacity on public transport that is not being used.
“People will be told that if you avoid the rush hour, the crush times, it is safe to travel.”
BCC Co-Executive Director Hannah Essex said: “Many businesses are suffering from an historic cash crunch and reduced demand, meaning firms will still face tough decisions despite welcome interventions made in the Summer Statement.
“The government should consider additional support for employers before the Autumn Budget to reduce the overall cost of employment and prevent substantial redundancies.
“Measures could include a temporary cut in employer National Insurance Contributions and support to upskill and reskill employees as businesses adapt to change.”
