Today (30th September) the Job Retention Scheme, also known as furlough, comes to an end.
The impact of the Covid-19 pandemic on our society and our economy is no longer speculation. It is clear the detrimental effects will leave a scar on the UK’s economic growth, particularly on jobs. The Government’s response to protecting viable jobs using the Job Retention Scheme (JRS) has been highly successful from the manufacturing industry’s perspective and has been the lifeline for many manufacturing businesses.
As manufacturers’ increasingly come to take the view that inflationary input pressures are unlikely to be transitory in the short-term, factory prices are now rising at pace as the sector endeavours to relieve pressure on its margins. This is something the industry had been reluctant to do at the outset of this inflationary spell, as within the context of the UK’s new EU and global trading relationship, the sector had been keen to maintain an offering that is as competitive as possible amongst the throng of global post-pandemic activity.
These various pressures mean that there remains a risk that once the JRS expires there is going to be an increase in redundancies for skilled viable jobs in some of our most valuable industries and so some form of tapering off of employment support should continue in the medium term. Therefore, Make UK is calling for:
- A modified version of the Job Support Scheme (JSS) to follow the JRS: When plans for the JSS were laid out initially, we did not believe it was appropriate for the situation at that time where firms struggled with limited demand and supply for its goods. However, recent Make UK surveys have indicated that demand has returned to the industry, and it is mainly the uncertainty of supply that currently hinders the sector’s growth. The JSS would now give support to a business’s current circumstance, where there is a stream of work available for employees (due to an increase in demand for goods) but that stream is increasingly staggered due to the uncertain nature of access to and deliveries of resources. Such a scheme would enable firms facing difficulties to utilise their workforce more flexibly and ensure they can return to 100% capacity once these disruptions subside. The JSS would need to be adapted to ensure that employers do not overpay for productive hours, and instead only pay the portion of the salary that the worker fulfils. We would also recommend that those employees who are users of the JSS spend part of the time where they are not in work undertaking training, for example through the Government’s new Skills Bootcamps.
- The Job Retention Scheme (JRS) to be reintroduced in the event of local or national lockdowns: Whilst we do believe that JSS is the best support option now that the economy has finally reopened, there remains a risk that social restrictions and lockdowns may return later down the line should infections increase, and vaccine effectiveness be limited. In this situation the benefits of the JRS do outweigh the costs by preserving the nation’s capacity to produce and allowing it to bounce back faster. Therefore, to ensure confidence levels do not fall below a minimum level that enables firms to at least plan for the future should such restrictions return, we want to see Government guarantee the JRS will always be accessible during temporary economic shutdowns.
- Work with industry on developing a long-term generic crisis management tool: The JRS has shown that during a crisis saving jobs is a sustainable solution to preserving the UK economy’s long-term health. We see a strong case for a long-term generic crisis management tool to be available for labour protection should there be other challenges in the future that risks large scale redundancies across the nation.
Next steps: Make UK will continue to engage with Government and wider policy makers, as well as using the upcoming Spending Review, to make the case for these protections for our sector.
Support: Make UK have prepared two new template letters for employers to use to end full or flexible furlough, you can access these, as well as further advice here.