UK businesses call for more jobs support

As the UK furlough scheme is set to end next month, and unemployment continues to rise, what do UK business leaders recommend the government do to sustain the labour market through the Covid-19 crisis?

Chancellor of the Exchequer Rishi Sunak holds his red budget dispatch box aloft

Chancellor of the Exchequer, Rishi SunakSource: No 10 Downing Street, https://www.flickr.com/photos/number10gov/49647527211, Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

David Sapsted

15 September 2020

British business leaders called for further government support for jobs on Tuesday after official figures showed the UK unemployment rate had risen to its highest level for two years.With the coronavirus pandemic hitting businesses across the world, the Office for National Statistics (ONS) unsurprisingly revealed that the UK's unemployment rate grew to 4.1% in the three months to July - up from 3.9%.

UK: younger workers badly affected by jobs downturn

The figures showed that younger workers were being particularly affected by the jobs downturn with 156,000 fewer people aged 18-24 in employment in the three months compared to the previous quarter.In all, almost 700,000 workers have disappeared from the payrolls of UK companies since the coronavirus lockdown was imposed in March. The fear is that, as the government's furlough scheme winds down and finally ends on October 31, the jobless total will soar further.The one bright spot in the ONS figures was that the number of job vacancies in the three months to August jumped by 30% to 434,000, although the total remained well below pre-pandemic levels.

UK jobs situation: redundancies likely to increase

Tej Parikh, chief economist at the Institute of Directors, said that while it was clear coronavirus was taking its toll on the jobs market, the full extent of the damage was still to emerge.“With the Job Retention Scheme winding down, cash-strapped firms will be struggling to support their staff. Redundancies are only likely to increase as state support for employee wages ceases at the end of October. For many companies, demand remains very much limited, with local lockdowns and renewed restrictions adding to the difficulties," he said.

UK government must act to prevent long-term unemployment

“The government must act quickly to counteract job losses and prevent the scarring effect of long-term unemployment. With youth unemployment increasing, the Kickstart Scheme targets a critical area, but the Treasury should go much further.“Broad-based measures to lower the cost of hiring and retaining staff, particularly by reducing the burden of employers’ National Insurance Contributions, are needed. The chancellor should avoid any delays to the Budget, the sooner action can be taken the better. With firms set to make difficult decisions on their staff, indications that further assistance is on its way will be even more crucial.”

UK: needs a continued furlough scheme to protect jobs and businesses

Matthew Percival, director of people and skills at the Confederation of British Industry (CBI), also said that a successor to the furlough scheme was badly needed.“The easing of lockdown restrictions and a more flexible Job Retention Scheme in July have led to the beginning of a recovery in vacancies and hours worked. But rising redundancies, rising unemployment and a record fall in the number of young people in work are clear warning signs of what is to come," he said.“Looking ahead, a successor to the Job Retention Scheme is needed to protect jobs and businesses.”

BCC recommendation: significant cuts to employer National Insurance Contributions to aid firms

Suren Thiru, head of economics at the British Chambers of Commerce, stressed that more help was needed for companies hit by local lockdowns.“While there was a rise in the number of job vacancies, this is more likely to reflect a temporary bounce as the economy gradually opened, rather than a meaningful upturn in demand for labour," he commented."With many firms are still facing waves of cash flow problems, rising costs and an uncertain economic outlook, it is probable that unemployment will escalate sharply as government support winds down.“To help avoid a damaging cliff edge for jobs more must be done help firms keep staff on through this deeply challenging period. This should include a significant cut in employer National Insurance Contributions and more substantial support for firms placed under local lockdowns.”

Chancellor of the Exchequer Rishi Sunak: no indication he will continue the furlough scheme after it ends next month

However, while Chancellor of the Exchequer Rishi Sunak pledged to protect jobs, he gave no indication that the government was prepared to reverse its decision to end the furlough scheme next month.“This is a difficult time for many as the pandemic continues to have a profound impact on people’s jobs and livelihoods. That’s why protecting jobs and helping people back into work continues to be my number one priority,” he said.

Kickstart Scheme to help younger people enter the labour market

Minister for Employment Mims Davies added that the new Kickstart Scheme, designed to help younger people into the labour market through six-month job placements paid for by the government, would boost the market.“We recognise that the pandemic has been difficult for many people who are worried about their incomes and that’s why our £30 billion Plan for Jobs is aimed at protecting, supporting and creating jobs and it’s welcome news that there is some recovery in vacancies," she said.“Meanwhile, we’re creating hundreds of thousands of fully subsidised new jobs for young people through our £2 billion Kickstart Scheme to give those starting out a leg up onto the career ladder and offer them hope for the future."And within our jobcentres we’re recruiting a further 13,500 Work Coaches so all jobseekers throughout the UK have access to tailored support, to build their skills and pivot into new roles.”