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Should furlough be extended?

Published: Tuesday 8th September 2020

The government’s furlough scheme stops at the end of October. The scheme pays 80% of wages for nearly 10 million people up to a value of £2,500 a month. The government also announced a £1,000 bonus scheme for workers brought back from furlough and employed to January 2021. The scheme has been running since March. However, many are now asking ‘should furlough be extended?’

Approximately 1 in 10 workers are on the furlough scheme in the UK. However, this figure rises to over 50% for workers in the arts, entertainment and recreation sectors. The scheme has been hailed as a success by many. However, some UK businesses are now asking ‘should furlough be extended’? Critics believe ending the scheme risks losing key skills in various sectors, such as manufacturing.

Image of a Union Jack purse next to a piece of paper saying 'furlough scheme' to highlight should furlough be extended?

Tsunami of unemployment

A growing number of companies are expressing concerns about the end of furlough. ‘Make UK’ represents over 20,000 companies in manufacturing, engineering and technology. A recent survey revealed approximately 62% of its members want the furlough scheme to continue. Frances O’Grady, general secretary of the TUC, warned of future dangers. She said, “Ministers cannot afford to throw away the good work of furlough. There is still time to avoid a tsunami of unemployment. Protecting jobs with fair pay is how we recover.”

The call comes after warnings of a wave of fresh job cuts should furlough not be extended. More than two-fifths of UK companies have made job cuts. In addition, a further third of companies intend to make redundancies in the next six-months. These findings are backed up by  business advisory firm BDO. The company has revealed that more than half of all medium-sized businesses it surveyed plan to cut jobs once the furlough scheme ends.

Signpost showing different directions to ask the question, should furlough be extended?

Long-term skills shortage

Some industries are predicted to be affected more than others. Sectors with high-skilled, well-paid workers, such as the automotive and aviation industries, have been hit hard. Stephen Phipson, chief executive of Make UK, says furlough must continue to prevent the UK falling behind internationally. He said, “The protection of key skills should be a national priority, as this will be the first building block in getting the economy up and running. These sectors should receive the greatest support possible.”

However, the government remains committed to its decision to end furlough. A government spokesperson said, “We’ve been clear that we can’t sustain this situation indefinitely and must now focus on providing fresh work opportunities across the UK.” Despite both sides agreeing on the need to return to work, it appears neither side knows how best to do this.

 

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