As the UK enters the final stages of the Government’s roadmap out of the pandemic, working life is beginning to return to normal. Employees working from home are now being encouraged to come back into their place of work and will therefore no longer be supported by the Coronavirus Job Retention Scheme (CJRS). For some, this will be their first time back at work since 23rd March 2020, when the Prime Minister announced the first national lockdown in the UK.
One of the reasons people were able to have such an extended period of absence, was due to the CJRS. It was introduced to help employers pay their employees if they had less work available or were unable to work because of the pandemic. It is more commonly known as furlough.
When the scheme was launched on 20th April 2020, it paid 80% of any furloughed employee’s wages up to a maximum of £2,500 a month and all associated employment costs. The uptake on the scheme was huge, with estimates of 11.6 million1 jobs being supported by the scheme.
From March to May in 2020 the redundancy rate in the UK was 4.1 per 1000 employees. This statistic rose significantly as the redundancy rate reached an apex of 14.5 per 1000 employees by September 2020.2
One of the likely catalysts may have been the initiation of the second phase of furlough in August 2020. This required the employer to increase their contribution to the employees’ wages as well as pay for the associated employers’ costs. Another reason for this sharp increase was purported to be the scheduled end to the scheme on 31st October 2020. Whilst the aim of the scheme was to reduce the burden on the treasury, some businesses thought the more money conscious option would be to make staff redundant rather than carry on contributing towards staff that were unable to work. In a last-minute decision, however, the government announced that the scheme was to be extended until March 2021, which in some cases, allowed companies to re-employ people they had made redundant previously during the pandemic. The extension of the scheme resulted in a dramatic drop in the rate of redundancy to what is now our current rate of 3.8 per 1000 as of May 2021.
The scheme currently pays 70% of wages up to a maximum of £2,187.50 per month, with the employer contributing 10% towards the worker’s wages and paying all employment costs. From 1st August 2021 the government contribution is reducing to 60% (max £1,875) and the scheme is finally ending on 30th September 2021.
Industries that require personal interaction such as hospitality, recreation, and travel services have understandably been hit the hardest throughout the pandemic. The impact was most evidently seen in the reduction of economic output in the hospitality sector which was down 90% in April 2020 compared to the previous February. Despite restrictions being lifted in the UK and a number of recreational services reopening, these industries are yet to bounce back to the same functional standard as before the pandemic. With the Job Retention Scheme being closed, the potential impact for these businesses and their employees could be huge.
As a significant number of employees within these sectors are young or casual workers, it is expected that they will be the most affected by the scheme’s conclusion. Since 6th April this year, the government have increased the weekly maximum Statutory Redundancy Pay by £6. This amount of money could be interpreted as negligible, in that only those employees who are over the age of 22, with 2 or more years of service, are eligible to receive a full week’s wage for each year of employment.
Despite this, information provided by our recruitment partners state they are beginning to see a huge increase in vacancies in sectors such as domestic services, hospitality, construction, transport and logistics, and manufacturing.
With e
mployers’ finding increased difficulty to fill vacancies due to post Brexit immigration rules and Covid restrictions on travel, jobs that were once deemed unskilled are now renamed essential. As the demand for delivery drivers surged in response to the pandemic, Tesco alone, provided permanent contracts to 3000 drivers in August 2020.3 We work with many driving recruitment agencies, and they have reiterated this to us, as they have a large number of vacancies in varying haul and licensed driving divisions within the distribution industry, offering both temporary and permanent contracts to fill the shortage of 100,000 drivers4.
In the construction industry, as a result of restricted travel, the shortage of workers in the UK has led to a significant increase in job opportunities as well as drive up the rates offered to skilled and unskilled labour.
Danny Austin, Commercial Manager at Exceed Outsourcing said:
“I have had many conversations with construction recruiters recently, where they are really struggling to keep up with the demand. One agency said that in order to attract bricklayers, they have had to increase the rate by £10 per hour. The shortage of workers is having a dramatic impact on the sector and I am sure we will see a lot more of it in the coming weeks and months.”
Whilst with the cessation of the CJRS might accommodate a second surge in employee redundancy, job seekers can be reassured that recruitment agencies are buoyant with vacancies as the current economic circumstance offers a multitude of employment opportunities. The future is bright for job seekers.
References
1https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/redundancies/timeseries/beir/lms
