UK faces massive job losses – but we should not extend furlough: Reed chief
By Dawn Gibson
The chairman of a leading UK recruitment group says the government should not extend the furlough scheme, despite the latest official employment data indicating the country is on the brink of a massive rise in job losses and redundancies.
The workforce shrunk by almost 700,000 people between March and August amid the biggest spike in redundancies for over a decade, since the fallout from the 2008 financial crisis.
The number of people who are estimated to be temporarily away from work (including furloughed workers) has fallen, but it was still more than five million in July, with over 2.5 million of these being away from their jobs for three months or more. There are also around 250,000 people away from work because of the pandemic and receiving no pay, according to the figures from the Office for National Statistics (ONS).
Young people aged 16 to 24 have borne the brunt of job scarcity.
James Reed, chairman of recruitment group REED, says he predicted in May that there would be a ‘tsunami of job losses’ when the government furlough scheme ends and the latest figures suggest the wave is set to crash through the economy this autumn. The scheme is due to end October 31.
“Although these statistics will cause concern, now is not the time to panic and extend the furlough scheme. It’s time for the country to move on,” Reed says.
“Businesses need to level with their furloughed staff about their future as soon as they are able to. People are facing uncertainty over whether their jobs will exist once the furlough scheme winds down and are in need of assurances either way. They must be allowed to move on, learn new skills, and begin searching for a new employer.
“The good news is that job opportunities are remerging. Over 128,000 new jobs were added onto reed.co.uk in August – a 7.5% month-on-month increase – and opportunities increased in nearly all the sectors featured on the site.
“Despite these uncertain times, some businesses will see an opportunity to invest in people and take advantage of this situation. The forward thinking can hire talent that would not normally be available.”
Jack Kennedy, UK economist at the global job site Indeed, says that while vacancies are slowly picking up, there are still far fewer jobs available than there were at the start of 2020, with an ever-rising number of people chasing after them.
“For months the official unemployment rate has resembled an iceberg – deceptively small and with the true toll of the pandemic largely hidden beneath the surface,” he says. “But as the months go by, we’re starting to see official signs of the danger ahead. The unemployment rate has picked up from the record low rate at which it held during the three months following March, but even at 4.1% it paints a deceptively rosy picture.
“As the end of the furlough scheme approaches, the sheer scale of the UK’s job losses is looming larger and the labour market is recoiling in response. The blunt truth is hundreds of thousands of people who had a job before Covid-19 hit no longer do.
“The number of people on payrolls has now shrunk by 695,000 and although the number who are economically inactive has decreased, there are still more than two million people away from work.
“Indeed’s data shows many jobseekers are reacting to the lower number of job postings by searching more outside their occupation, and seeking to transfer their skills to sectors which are still seeing growth.”