Friday 31 July 2020 / 10:35 PM Business / Ed Miliband

Johnson’s Jobs Squeeze to hit struggling sectors as government begins severing furlough support 

Johnson’s Jobs Squeeze to hit struggling sectors as government begins severing furlough support 

Employers desperate to retain staff and protect jobs, but in sectors still prevented from reopening their businesses by lockdown rules, are faced with having to make a choice between letting go of staff or paying to keep them, Shadow Business Secretary Ed Miliband MP warned today.

Employers in sectors still unable to open including night clubs and soft play centres are being hit with a bill running in the tens of millions, as all employers must now pay towards the cost of furloughed staff.

Employers are being forced to pay approximately £550 per employee on furlough over the course of the next three months, on average, with the bill adding up for those sectors still fully or partially closed.

While some sectors have been open for months and are trading well, businesses such as indoor play centres and night clubs are still in the dark with no date yet set for their reopening. Many other businesses in the hospitality and wedding sectors are still struggling to break even as they slowly emerge from lockdown.

New analysis from Labour has revealed that, based on average figures, the new employer wage contributions mean:

  • The night time economy has 520,000 workers on furlough, with many venues including night clubs and live entertainment venues having to remain shut and many pubs, bars and restaurants under financial pressure. The sector as a whole is facing a bill of around £285 million just to keep their staff on the books over the next 3 months.
  • Indoor play centres and soft play areas, which do not yet have a reopening date, will have to take a hit of almost £10 million over three months to pay for the 18,000 staff on furlough.
  • The exhibition, trade show and events sector will have to pay almost £22 million in wage contributions to keep the 40,000 workers currently furloughed.

With the country facing the deepest recession in 300 years and the government pursuing a one-size-fits-all withdrawal of furlough, the Shadow Business Secretary is warning ministers it is far from ‘job done’ on furlough, with hundreds of thousands of jobs still very much at risk.

Failure to make government support for businesses more targeted and focused would be a historic mistake, driving up unemployment in this country, and costing hardworking businesses and people their livelihoods.

Ed Miliband MP, Shadow Secretary of State for Business, Energy and Industrial Strategy, said:

“Many businesses still have little or no cash coming in, but are trying to do the right thing and save their employees’ jobs.

“They now face the stark choice of letting go of their staff or facing a hefty financial burden to keep them on.

“Businesses in vastly different sectors and circumstances should not be treated in this uniform way, and it is clearly unfair and illogical for those employers still locked down and unable to trade.

“Unless Ministers recognise the scale of the jobs crisis and change course they will force employers to make cuts, and be culpable for thousands of workers across the country losing their jobs and livelihoods.”

Labour is calling on the Government to end their damaging blanket approach to ending furlough support before it is too late, and to target support at the hardest hit sectors. This would encourage businesses to stick with workers and not make them redundant now, which is inevitable unless government changes course.