Tuesday, 06 October 2020 13:30

Covid: Nearly 500,000 redundancies planned since crisis began

Covid: Nearly 500,000 redundancies planned since crisis began Covid: Nearly 500,000 redundancies planned since crisis began

British employers planned 58,000 redundancies in August, taking the total to 498,000 for the first five months of the Covid crisis.

Some 966 separate employers told the government of plans to cut 20 or more jobs, compared with 214 last August, a more than fourfold increase.

However, the figures were down from the levels seen in June and July, which both saw 150,000 job cuts planned.

The figures were released to the BBC after a freedom of information request.

Employers planning 20 or more redundancies

HR1 forms submitted

 
(England, Scotland and Wales)
Source: Insolvency Service

The economy bounced back in the summer after the unprecedented economic downturn earlier in the year, as workers were urged to return to the office, and customers encouraged to spend more by schemes such as the Eat Out To Help Out restaurant vouchers.

However a number of big businesses from many of the hardest-hit sectors, such as retail and restaurants, announced big redundancy plans, including Debenhams, DW Sports, Marks & Spencer, Pret a Manger, currency exchange company Travelex, and WH Smith.

The 58,000 positions put at risk in August was considerably lower than previous months, but it was still more than 150% up on the previous year.

"There was a sense of optimism in August, we were starting to see more spending and more activity, there were hopes for a quick recovery," said Rebecca McDonald, senior economist at the Joseph Rowntree Foundation think tank. "That seems a lot less likely now."

Planned redundancies

Proposed dismissals submitted

 
(England, Scotland and Wales)
Source: Insolvency Service

A government spokesperson said: "Supporting jobs is an absolute priority, which is why we have set out our plan for jobs to protect, create and support jobs across the UK.

"We are helping employees get back to work through a £1,000 retention bonus, creating new roles for young people with our £2bn Kickstart scheme and doubling the number of frontline work coaches."

How will the end of the furlough scheme affect redundancies?

The big summer rush may have been partly caused by firms preparing to cut staff before the end of the furlough scheme on 31 October.

That scheme, where the government pays part of workers' wages when their employers cannot, has helped to reduce the number of pandemic-related redundancies. A total of 9.6 million jobs were furloughed.

But given that most redundancy processes take months to complete, firms planning significant dismissals by the end of furlough would have had to notify government in the summer.

The Chancellor, Rishi Sunak, unveiled a new employment support scheme last month, where government will subsidise the pay of employees who are working fewer than their usual hours due to reduced demand.

Emily Piper's husband Paul had been on furlough since the end of April.

Last month his employer sent a meeting invitation. The reason was not specified, but Paul knew it could only be about one thing: compulsory redundancy. His employer - an IT firm supplying major restaurant chains - had been badly hit by the economic downturn. The Job Support Scheme didn't provide enough money for them to keep him on.

He was given the statutory minimum redundancy payment, which came to just under two months' salary. "It will get us to Christmas but it won't get us beyond Christmas," says mother-of-three Emily.

She now faces potential redundancy from her job at a local authority which has lost a third of its budget. "It's been horrendous, the not knowing what's happening. We're both in our late 30s so we've experienced hard times before, but nothing quite like this."

He is applying for jobs every day, and she's confident that as a highly qualified professional he'll find work when normal times return, if not before. But the family faces an uncertain few months, possibly having to live on £960 a month Universal Credit.

"We have scaled all our spending back to bare minimum. We are selling our car, whilst we wait for a new job for him in the knowledge that universal credit will not cover half our bills."

"My youngest can't go to nursery because we can't spare the money so we've been asking family to look after her.

"I am so scared. We have three young children and never have been out of work. I don't know how we will cope."

Presentational grey line

It is less generous than the furlough scheme, and the next few months of redundancy data will give an early indication of how successful it has been in protecting employment.

"Many employers will have difficult decisions to make in the coming months. Given the design of the new scheme it seems likely that there will be a significant number of redundancies in the winter," said Ms McDonald.

"We are concerned that it will be the lowest-paid workers in the hardest-hit sectors who will be affected the most."

 
Media captionOdds of redundancy "very frightening"

Employers are obliged to notify government when they plan to make 20 or more staff redundant in any single "establishment" using an HR1 Advance Notice of Redundancy form. However, they often make fewer positions redundant than the number they initially notify.

These figures pick up an increase in redundancy plans long before the Office for National Statistics' redundancy figures, which appear with a lag of several months.

ONS numbers showed 156,000 redundancies from May to July, up from 107,000 in the previous three-month period.

However, any redundancy process involving fewer than 20 people doesn't show up in these figures so the eventual total is likely to be larger than the HR1 numbers suggest.

Companies in Northern Ireland file HR1 forms with the Northern Ireland Statistics and Research Agency and they are not included in these figures.

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Source: https://www.bbc.co.uk/news/business-54392177

 

Last modified on Tuesday, 06 October 2020 13:30