Furlough warning: ‘The worst is yet to come’ as ‘last straw’ forces job losses – get ready | Personal Finance | Finance


Furlough support was extended by Rishi Sunak recently as the Chancellor laid out his 2021 Budget. In announcing the extension, Rishi reflected on how proud the Government was of it’s efforts: “The furlough scheme will be extended until the end of September.

However, while the furlough scheme and other support measures may have kept the economy afloat in 2020, newly released data from the ONS shows the successes may be limited.

This week, the ONS published employment figures for December to February which revealed:

  • Early payroll estimates for March show there were 28.2 million employees – down 2.8 percent or 813,000 in a year, and 56,000 in a month.
  • More than half of those who lost jobs in March were under 25 (53.7 percent ), over a quarter were living in London, and over 40 percent worked in accommodation and food services.
  • The March falls came on the back of a small bump in December-February, which saw unemployment fall 50,000 in a quarter – the first quarterly fall since the end of 2019.
  • In March, 1.67 million people were unemployed, and the unemployment rate was 4.9 percent – up 0.9 percent percentage points in a year but down 0.1 percent in a quarter.
  • In the three months to February, the employment rate fell 0.1 percentage points in a quarter and 1.4 over the year to 75.1 percent . 32.43 million people were employed – down 643,000 in a year.
  • The redundancy rate fell by a record 6.8 per thousand on the quarter, to 7.3 per thousand. However, it was up by 3.5 per thousand on the year.
  • Even among those who were employed, 15 percent were temporarily away from work in the first two months of 2021 and just over 300,000 received no pay while their job was on hold.
  • Total pay (including bonuses) was up 4.5 percent and regular pay was up 4.4 percent . However, when one removes the impact of the loss of lower paid jobs to the economy, underlying wage growth was around 2.5 percent

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Sarah Coles, a personal finance analyst at Hargreaves Lansdown, commented on these figures: “The latest lockdown killed off tens of thousands of jobs for young people, Londoners, and those working in hotels and restaurants.

“March was the final straw for many businesses, who finally gave up and let staff go.

February had looked so promising, with a 50,000 fall in unemployment over three months, but this was quickly followed by a 56,000 collapse in March.

“The furlough scheme is keeping a lid on redundancies: we saw a record fall in job losses in the three months to February. However, when the Chancellor announced the future for the scheme, businesses took stock. And while some decided it was enough to soldier on, many of them realised that social distancing and restrictions meant some staff had to go – particularly in hospitality businesses.

“The blow is particularly harsh for young people, who made up more than half of these losses.

Sarah concluded by issuing a warning of what may occur as the furlough scheme is brought to a close: “When the furlough scheme unwinds towards the end of the year, the Office of Budget responsibility expects unemployment to peak at around 6.5 percent.

“It means that while it has been an incredibly difficult time for millions of people, for many of them, the worst is yet to come.”

For those who are currently furloughed, getting back to work may also prove to be especially difficult as recent research detailed furloughed workers are likely to face discrimination and stigma when they head back to the office.

Sapio Research, in partnership with Skout PR, surveyed business decision makers across the UK and the results showed that 45 percent of UK companies think there will be recruitment discrimination against candidates who have been furloughed.

Furlough discriminaition may impact those who work in the digital and financial industries specifically, with 62 percent of decision makers in these fields agreeing that candidates will be advantaged if they haven’t been on furlough.

Jane Hales, a Managing Partner at Sapio Research, concluded on these results: “It feels as though furlough discrimination is the big next equality issue. There will be a whole new set of unconscious biases that businesses will need to be mindful of. The impact the two-tier situation has on employee engagement and productivity would be fascinating if it wasn’t so difficult to watch.”

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