Furlough scheme ends with a splash

Furlough scheme ends with a splash

Having been in operation for more than a year, the furlough scheme largely faded into the background over the summer. Given that many on the scheme had either returned to work at the request of their employers or been let go because their company had determined their roles to be redundant, there may have seemed no more than a handful of people still benefitting from the government initiative when it finished at the end of September 2021.

Government figures state that there were actually a million workers still on the scheme when it was wound up.

According to various social media posts on the subject, many of the employers of furloughed workers—now they can no longer claim part of their employees’ wages— have either taken the opportunity to make their roles redundant, or their employee has decided that, actually, they don’t want to work for said employer after all. The fallout of these scenarios has caused an almighty splash of new jobseekers amongst the ‘available for work’ talent pool.

Again, if some social media posts are to be believed, there have been many abuses of the furlough scheme during its incarnation. From companies claiming employees’ wages whilst still demanding they work for the business, doing their usual hours, to people being made redundant then instantly rehired with a slightly tweaked job role (so as not to arouse suspicion that their role hasn’t actually altered one iota). And, though not illegal, some furloughed workers gave their energy and servitude to another company entirely since the scheme began and enjoyed double the wages.

Some UK employers are happy that the furlough scheme has ended, particularly those in industries that have struggled to recruit staff—the hospitality sector, for example. They believe the end of the scheme will give the last million furloughed the motivation to take up such jobs.

There are some sectors that haven’t quite returned to their pre-pandemic income levels, such as the travel industry. There’s still a lot of uncertainty for employees in this field, and the furlough scheme has helped them pay their bills—but what does the future hold for them now? As of the end of July 2021, government data stated that a staggering 46% of agency and operator staff were on the scheme—the highest rate of any industry other than aviation, according to Gary Noakes, writing for TTG Media. One of the industry’s bodies has begged the government to consider further support for these specific sectors.

The powers-that-be believe that the furlough scheme ultimately saved more than 11.6 million jobs—for the bargain price of £68bn, which was the overall cost of the scheme and represents a fifth of the total government spend in response to Covid. The question for the taxpayer is: does this represent value for money? Was the fallout of the lockdowns, etc. as bad as was predicted at the outset of the pandemic? For example, according to the BBC, before the furlough scheme launched, it was feared that more than one in 10 workers would become unemployed. The unemployment rate is currently less than one in 20; however, there’s every chance that a million more people could end up claiming benefits now that the financial rug has been pulled from beneath them.

The Resolution Foundation believe that there’s a ‘real risk’ of unemployment for those people who were still on the scheme when it ended, which means a busy time for recruiters. Research from the Institute of Fiscal Studies shows that workers in London were more likely to have remained on the furlough scheme until the end, and many older employees were still claiming as the initiative was wound up.

Rishi Sunak is aware of the problems these people face. He is apparently ‘throwing the kitchen sink’ at the issue, stating, ‘I said right at the beginning of this crisis it wasn't going to be possible for me, or quite frankly any chancellor, to save every single person's job.’

So, the fate of the final furloughed now lies with their employer, in a kind of ‘Stick or Twist’ gamble on their future with the company they work for. Will they have them back and continue to build on the last few months of custom? Or will they play it safe, given how shaky their finances have no doubt been during Covid, and make them redundant? What if, in a few months, they’re desperate for more bodies as Christmas trade sky-rockets (assuming there are no further lockdowns)?

It’s a dilemma that will hopefully be the only one if its kind. There’s no guarantee that the furlough scheme won’t rise like a phoenix from the ashes if more lockdowns are imposed; however, with the vaccines helping the country keep on top of any further spikes, maybe this fear won’t be realised.

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