Could the end of furlough see a staffing crisis begin?

The end of September will see a lot of changes including the expected closure of one of the most remarkable support schemes enacted in the UK.


Furlough is ending and a staffing crisis could be beginning

Furloughed

 

The Coronavirus Job Retention Scheme, more commonly known as furlough, was launched in March 2020 to support businesses and employees through the unprecedented disruption caused by the coronavirus and subsequent lockdowns. 

 

In our Year of Lockdowns report we found that one in three UK workers were in receipt of a furlough scheme payment at some point in 2020. 

 

The popularity of the scheme peaked in April 2020 when just under nine million workers were furloughed although this total has reduced to just over 1.9 million by the end of June 2021. 

 

According to the latest official figures, 11.9 million jobs had been placed on furlough by over 1.3 million employers at some stage during the previous 18 months at a total cost of £65.9 billion. 

 

This might seem expensive but it would be argued by supporters that it fulfilled one of its primary objectives by holding the unemployment rate at 5.1% at the end of 2020 which saw an additional 1.7 million people looking for work but without furlough. 

 

This figure has since reduced to 4.8% at the end of June 2021 and is currently only 0.9% higher than at the beginning of the pandemic. 

 


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Since May 2021, the central contribution to employees wages from the government has reduced from a figure of 80% of the total wage up to a maximum of £2,500 down to 60% of the total to a maximum of £1,875. 

 

The employer continues to pay national insurance contributions (NICs) and pension contributions for staff as well as a 20% contribution to wages for hours not worked up to a maximum of £625.

 

Along with many other notable changes occurring at the end of the month, the one which is expected to have the most immediate effect is the final closure of the CJRS.

 

Chris Horner, insolvency director with BusinessRescueExpert.co.uk, thinks attention should be paid to the discrepancies between various sectors and mismatches between vacancies and employees when analysing the impact. 

 

One example is in the hospitality sector including both accommodation and food services.

 

The Office for National Statistics vacancy survey showed that 117,000 jobs were available between May and June but at the same time 337,800 staff remained on furlough during this period. 

 

Even if furloughed staff successfully reapplied for all those positions, there would still be over 220,000 workers left without positions. 

 

He said: “When you have a mismatch between the sectors that people are on furlough from and the sectors that are actively recruiting then there will naturally be an imbalance that has to be carefully managed – both in terms of the personnel and the support given to businesses in those areas. 

 

“Some skills will be transferable but not every position is. 

 

“Sales assistants and hospitality staff might not want to take pay cuts to move into the care industry or spend time retraining as a delivery driver or production operative for instance.

 

“This could clearly have implications for businesses and unemployment in the short term at least.

 

“For small business owners and directors, who are already juggling with bounce back loan repayments, VAT arrears, the return of creditor actions including winding up petitions and business rates, a staffing crisis will be the last thing they need.”

 

 


Bounce back loan arrears affect sole traders and partnerships too


 

 

If you think the school holidays and summer went quickly, you won’t believe how soon the end of September will arrive. 

 

There is still just enough time to get in touch with us and arrange a free initial consultation with one of our expert advisors.

 

If you’re worried or already having problems repaying debts like bounce back loans or VAT arrears then we can help advise you on what your options are. 

 

The sooner you take action, the more time and leeway you’ll have to use – because sadly, time and choices will eventually run out.  

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