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More than half of furloughed employees back to work – but job crisis looms as scheme winds down and businesses remain shut

Time 10 months ago

Employers have brought back more than half of workers who were on the furlough scheme, new research suggests.

As the furlough scheme begins to be wound down from today (Aug 1), research from the Resolution Foundation said reports that of nine million people being on the furlough scheme were untrue.

It estimates at the scheme’s high point in late April, around eight million had been signed up to the job retention scheme.

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Since then, millions of furloughed workers have returned to work, either fully or as partially furloughed part-time workers, meaning that fewer than 4.5m employees are now furloughed, said the report.

It added that the peaks and falls of those on the scheme shows the furlough programme to have been a success.

However, the think tank warned that the risk of redundancy now faces many millions of people who are still furloughed.

From today, August 1, the scheme changes and begins to wind down.

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Employers now have to contribute towards the cost of the furlough scheme by paying employees’ National Insurance and pension contributions.

Dan Tomlinson, senior economist at the Resolution Foundation, said: ‘The Job Retention Scheme has supported around a third of the private sector workforce at some point since lockdown began, protecting family incomes and preventing catastrophic levels of unemployment.

‘But, with the number of furloughed workers having peaked in late April, it is misleading to say that nine million workers are currently furloughed. Over half of these workers have now returned to work as lockdown restrictions have eased. The true figure is below 4.5m.

‘But while furloughing is currently far less widespread than commonly claimed, there are still millions of employees without work, particularly in the hospitality and leisure sectors. These workers face a heightened risk of unemployment as the JRS starts to be phased out from today.

‘The chancellor should reduce this risk by phasing out support for these hardest-hit sectors more slowly.’

Federation of Small Businesses chairman Mike Cherry said: ‘One in five small firms have been forced to let staff go over the last three months. Even with critical emergency measures in place, jobs are sadly being lost in the here and now.

‘As we look to the autumn, it’s clear that we cannot afford to pull up the business support drawbridge any time soon.

‘Giving firms £1,000 for every employee they bring back from furlough is welcome, but Job Retention Bonus funds won’t manifest until next year – jobs are being lost today.

‘In addition to job retention, the chancellor should be looking at job creation.’

Labour is now warning employers now face a ‘stark choice’ of laying off staff or taking on the financial burden of keeping them in work.

The criticism of the government comes as many business such as beauty salons, bowling alleys and other leisure venues were due to open today, allowing employers to bring back many furloughed workers.

But on Friday (Jul 31), the prime minister ordered these business not to open and delayed measures for at least a fortnight – less than 24 hours before employers began to pay for employees’ National Insurance and pension contributions.

August sees the furlough scheme tapering off and will continue to wind down in September with firms expected to contribute 10 per cent of furloughed employees’ salaries, rising to 20 per cent in October.

Labour’s shadow business secretary Ed Miliband said: ‘Many businesses still have little or no cash coming in, but are trying to do the right thing and save their employees’ jobs.

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‘They now face the stark choice of letting go of their staff or facing a hefty financial burden to keep them on.

‘Businesses in vastly different sectors and circumstances should not be treated in this uniform way, and it is clearly unfair and illogical for those employers still locked down and unable to trade.’

The treasury said the ‘unprecedented’ scheme will have run for a total of eight months at a cost of £31.7bn.

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer.

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