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Jobs Data Prompts Calls To Extend Furlough As Russian Vaccine Grabs Headlines

The Federation of Small Businesses and the Trades Union Congress are among those calling for an extension of the government’s Job Retention Scheme (JRS) following the release of Office of National Statistics data showing there are now an estimated 730,000 fewer employees on payrolls compared to March 2020.

The grim numbers – recording the biggest drop since 2009 – failed to dent UK, European and US stock markets, which responded positively to news coming out of Russia that the country has developed a coronavirus vaccine.

The World Health Organisation is reportedly working with Russia to confirm the safety and effectiveness of the vaccine. Over 100 vaccine programmes and trials are taking place worldwide.

The UK’s JRS enables firms to put staff on furlough if they cannot work, with 80% of their wages paid up to £2,500 a month. The scheme is scheduled to end in October.

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Originally, the government picked up the entire cost, but employers started to contribute from the beginning of this month, and will pay increasing amounts each month until it closes. Employees continue to receive the same amount.

You can find details of how the furlough scheme operates here, including a timeline of changes that will come into effect over the coming months until it closes at the end of October.

Mike Cherry at the Federation of Small Business (FSB) said the future of the JRS will need to be reviewed in light of the ONS figures: “The option of a meaningful extension to the furloughing initiative should be kept open, especially now local lockdowns are a fact of life and a meaningful second spike in coronavirus infections is possible.”

Alarm bells

Frances O’Grady at the TUC said: “The alarm bells couldn’t be ringing any louder. Ministers must act now to protect and create jobs. 

“That means extending the JRS for businesses with a viable future who can’t operate because of virus restrictions. It means investing in the jobs we need for the future in green industries, social care and across the public sector. And it means ensuring a decent safety net is in place to help those who lose their jobs get back on their feet. 

“The more people in work the faster our economy will recover from this crisis.” 

Nye Cominetti at the Resolution Foundation said: “Today’s data does confirm the heavy lifting the JRS has done to keep mass unemployment at bay. However, August is a turning point in the response to the crisis, with employers contributing to furloughed workers’ pay for the first time. 

“Job openings, although slightly recovered since hiring stalled during lockdown, remain at low levels in the hardest–hit industries, creating a worrying environment for any workers in companies that have recently announced significant redundancy plans. 

“The government needs to heed these early indicators and extend support to those sectors and workers that are going to be hit hardest by the economic fallout of this crisis.”

Urgent support

Mr Cherry said the self employed sector is also in need of urgent support having reduced in size by a record 238,000 individuals between Q1 and Q2 of this year: “To see our self-employed community shrinking so rapidly is frightening. Sole traders were absolutely integral to our recovery from the last recession, and the government should doing all it can to help them play that same role again.

“Many people leaving payrolls will be thinking about striking out on their own, and they should be given the support they need to start-up, innovate and go on to create jobs and growth. This year’s Autumn Budget should include meaningful commitments to the New Enterprise Allowance and Start-Up Loans Programme.

The government has received praise for the support provided to employers during the pandemic, but its efforts with regard to the self-employed have been criticised as inadequate.

The Self Employed Income Support Scheme (SEISS) has provided two grants to in recent months to self-employed individuals affected by the crisis, but individuals in their first months of becoming self-employed as well as those operating as directors of limited companies have received nothing.

Mr Cherry said: “It’s important to remember that these figures don’t capture the experience of all those who are suffering. Thousands of company directors are desperately trying to keep their operations afloat having received no help from the government for months now.

“We urgently need to see the Treasury spell out how it intends to help those who’ve been left behind.”

As of 9 August, 9.6 million staff were on furlough, with 1.2 million firms claiming from the Job Retention Scheme at a total cost of £34.7 billion.

The latest figures for the SEISS show 2.7 million claims, with grants paid out totalling £7.8 billion.

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