A third of UK firms plan job cuts by October as furlough scheme ends
As many as one in three UK firms plan to slash jobs by October as the government winds up its coronavirus furlough scheme, a new survey has revealed.
Roughly 33 per cent of companies, charities and public sector bodies said they expected to make redundancies in the third quarter, according to a poll from the Chartered Institute of Personnel Development (CIPD) and staffing firm Adecco Group.
The figures mark a 50 per cent increase in the number of firms expecting to make cuts since the previous report three months ago. Twice as many private sector employers are set to make cuts compared to public sector bodies.
The grim survey highlights the potential scale of job losses across the country as the coronavirus job retention scheme draws to a close.
The programme, which came into effect in April, saw the government pay 80 per cent of wages for workers who were placed on furlough. It is likely to have prevented swathes of job losses.
However, from this month employers have been forced to contribute to the scheme and the support is set to be withdrawn completely at the end of October.
Gerwyn Davies, senior labour market adviser at the CIPD, warned of a “sombre autumn for jobs”.
“Until now, redundancies have been low — no doubt due to the job retention scheme — but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes.”
The survey showed overall hiring intentions have increased, with almost half of employers expecting to take on new staff in the next three months, up from 40 per cent in the previous quarter.
However, Davies warned this rise was unlikely to offset increased redundancies and the number of new graduates entering the job market in the next few months. He added that employers were also likely to initiate a squeeze on pay, though this could help to limit large-scale job cuts.
UK companies have already cut thousands of jobs across the country as the pandemic ravaged all sectors of the economy.
Airlines have been among the worst affected companies during the crisis, with British Airways and Virgin Atlantic slashing 12,000 and 3,000 jobs respectively.
Other blue-chip names such as BP have announced large-scale redundancies, while the retail and leisure sectors have suffered thousands of job losses.