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Task Force vital to retain key talent for future demand

Key findings:

  • A quarter of companies plan to make redundancies in the next six months with less than a third currently ruling any out
  • Of those planning redundancies more than a quarter involve up to half their staff, with almost a third up to a quarter of staff
  • Almost a third of companies have seen their orders decline by up to 50%
  • Expectations that it will take more than a year for normal trading to return have increased

Britain’s manufacturers are calling for the establishment of a National Skills Task Force as companies are bracing themselves to have to make substantial redundancies as the rate of decline in orders accelerates and pessimism about a return to normal trading within the next year has grown according to a survey released today.
In response, Make UK is calling for the establishment of a Task Force which would have the objective of retaining key skills within industry by re-deploying employees who have lost their jobs to other companies and enabling them to be re-trained. A smaller such scheme was set up after the Financial Crisis but Make UK believes there is now a case to establish a much bigger scale project on a national basis.
The survey also comes ahead of an expected announcement by the Chancellor of the Exchequer on plans to gradually unwind the Job Retention Scheme and a requirement for employers to make an increased contribution to the salaries of furloughed staff. In response, Make UK is urging the Chancellor to provide employers with as much clarity and certainty as possible to enable them to plan any restructuring, together with increased flexibility in the scheme to allow for part time working two days a week. 

“We are now in such uncharted territory that what would until recently been thought of as unthinkable is now very much the reality. While the support schemes in operation are providing significant support to the economy there are some sectors and companies who are fundamentally sound businesses and were trading positively before the pandemic. Instead, however, they have now been driven to the cliff edge by the nature of this crisis and may not survive without direct Government intervention.

“These companies are in key strategic sectors for the UK internationally and provide substantial numbers of highly skilled jobs across the UK and down through their supply chains. Many are also in regions which would suffer disproportionate economic harm if they did not survive. Government should therefore intervene directly to provide support and ensure their survival.

“Furthermore, there are thousands of companies who have had to take on debt to survive through lockdown. Government needs to intervene to ensure they have access to capital not only to be able to service the debt, but also to grow in the future.”

Stephen Phipson Make UK Chief Executive
According to the latest Covid 19 Manufacturing Monitor published by Make UK, the manufacturers’ organisation the number of companies now operating in some capacity continues to grow, standing at just under 95%. However, despite this a quarter of companies plan to make redundancies in the next six months with a further 45% possibly planning to do so. At this stage, just under a third of companies (30%) do not plan to make redundancies.
Of those who plan to make redundancies, over a third of companies (33.3%) plan to make up to 10% of employees redundant, just under a third (31.1%) up to a quarter of employees, whilst more than a quarter (28.9%) plan to make up to half their staff redundant.
Make UK also warned that the rate of decline in orders has increased compared to the last survey two weeks ago with the number of companies reporting order declines of more than half up from just under a quarter to just under a third (31.8%) while those reporting declines of up to half also increased from just under a quarter to just over (27.1%).
Furthermore, the number of companies who believe it will take more than a year to return to normal trading conditions has also grown slightly from the last survey, up to just under four fifths (37.8%) from 36% two weeks ago. The extent to which pessimism amongst companies has grown is highlighted by the fact the figure for the same question stood at just 17% of companies a month ago.

Make UK has made the following recommendations to the Chancellor on changes to the Job Retention Scheme.

1. Certainty and notice. Employers need to know exactly what is happening and when with explicit detailed guidance around the changes so they can work to a fixed timeline with sufficient time to prepare any restructuring to their workforce in good time.
2. Real flexibility. Removing the three week minimum period must be a priority when the Scheme becomes more 'flexible' in August with the element of flexibility allowing furloughed employees to work part-time. Part-time work should be allowed at least for 2 days a week where these employees would receive their normal contractual salary. In addition, the government needs to provide a top up for employers National Insurance Contributions and pensions. 
3. If there is a guillotine that prevents employees joining the furlough scheme for the first time, the introduction of new flexibility must be introduced at the same time. This would allow employers to put additional employees on furlough, without losing the opportunity to benefit from the scheme, and allowing employees to continue to work for them at least some of the time
The survey of 224 companies was carried out between 19 and 26 May

View the full findings here 

News / Coronavirus / Make UK / Media release