More than a million people will have lost their jobs by the start of next month as a result of Covid-19, according to employment experts and market commentators, with some believing that number has already been surpassed.
The pandemic has poleaxed the UK economy, with a slew of Britain’s biggest companies and best-known high street names announcing painful and far-reaching redundancy programmes.
Slew of job cuts
Last week more than 4,000 major job cuts were announced by UK firms, including 550 losses at NatWest, 115 at the Evening Standard and 2,500 at Debenhams.
Latest figures from the Office for National Statistics, published last week, showed numbers of workers on company payrolls had fallen by 730,000 since March.
Melissa Davies, chief economist at consultancy Redburn, said: “At this pace, the number of jobs lost could easily reach one million by September, and comfortably by the time the furlough scheme is wound up in October.”
She warned the losses were “unlikely to stop at one million”. “Seven-and-a-half million workers were on furlough in June, with three million having been on furlough for more than three months. If we assume 30 per cent of currently furloughed workers do not return to the workforce, that gives us around 2.25 million job losses.”
Paul Dales, at research firm Capital Economics, suspects the one-million mark has already been hit. “It’s just the lags in the data mean it hasn’t been confirmed yet.”
There are fears the job-retention scheme has been a sticking plaster over a deeply wounded economy.
True scale of the problem is masked
Kirsty Rogers, at law firm DWF, said: “The true scale of the problem is masked by the job-retention scheme. Figures could reach record highs when the scheme closes, and indeed employers are preparing or have commenced collective consultation exercises timed to conclude on or before the end of the scheme, meaning redundancies take effect at that point.”
The Government declined to comment on the one-million figure but a Department for Work and Pensions spokesman said: “We’ve protected more than 9.6 million jobs through the furlough scheme, supported more than two million self-employed and paid out billions in loans and grants to thousands of businesses.”
They said the next “recovery phase aims to protect, support and create jobs through the youth Kickstart scheme, sector-based work academies and by doubling numbers of work coaches across our job centres”.
Job retention scheme holds key to job cut total
Just how many people lose their jobs over the next few months will hinge on how employers react when Chancellor Rishi Sunak’s job retention scheme ends on 31 October.
About 8.9 million workers are now covered by the furlough scheme, according to Treasury figures, and the concern is once that programme closes companies will fast-track redundancy procedures to cut costs and help keep their businesses afloat.
Nye Cominetti, at the Resolution Foundation, said: “The job retention scheme has done its work in keeping mass unemployment at bay during the deepest phase of the lockdown – but we’re now at a turning point.
“Employers are contributing to furloughed workers’ pay for the first time this month, and many companies will inevitably be having tough conversations about how they staff their activities.”
Tej Parikh, at the Institute of Directors, added: “When the scheme ends there is likely to be a jump in unemployment numbers, with job losses mounting well into next year.”
