The government’s furlough scheme must be extended for critical sectors of British industry or the country risks losing key skills as it recovers from the pandemic, according to the UK’s foremost manufacturing group.
Make UK is joining calls for the government to change its mind about ending the coronavirus job retention scheme in the autumn, after a survey of its members showed almost two-thirds (62%) of companies agreed with the proposal that the scheme be extended.
The call comes after the outgoing head of the business lobby group the CBI, Carolyn Fairbairn, urged the government to create a successor to the scheme to preserve jobs.
Nearly a quarter of companies surveyed said they disagreed with the government’s decision to end the furlough scheme and felt it should be extended to critical sectors, while 17% of firms said it should be extended for all businesses.
The scheme has paid 80% of the wages of 9.6 million furloughed workers, up to £2,500 per month, since it was launched in March, and has also supported 2.6 million self-employed people. From September, firms have to pay employers’ national insurance and pension contributions for their furloughed staff, as well as 10% of the workers’ wages, rising to 20% in October.
The scheme will finish at the end of October, although the government will pay companies a job retention bonus of £1,000 for every worker brought back from furlough and employed through to January.
Make UK, which represents 20,000 companies of all sizes in engineering, manufacturing, technology and the wider industrial sector, said it believed an extension to the furlough scheme may help to avoid a fresh wave of redundancies after October.
More than two-fifths of companies said they had already cut jobs, and a further third of firms said they intended to make workers redundant in the next six months. In a survey also released on Monday, the business advisory firm BDO found that more than half of medium-sized businesses were planning job cuts once the furlough scheme ends.
The automotive and aviation sectors, which employ highly skilled and well-paid workers, are among the hardest hit by the pandemic and are the most in need of an extension to the furlough scheme, according to Make UK.
The chief executive of Make UK, Stephen Phipson, said an extension to furlough for the most-affected sectors of the economy was needed to prevent the loss of skills, which would set the UK at a disadvantage internationally.
“The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running. Ensuring that those sectors which are at the forefront of technology and will provide the growth sectors and high-skill jobs in recovery should receive the greatest support possible,” Phipson said.
The Treasury said the furlough scheme will have been open for eight months when it ends in October. A spokesperson said: “We’ve been clear that that we can’t sustain this situation indefinitely and must now focus on providing fresh work opportunities for those in need across the UK.”