Leading business groups in the UK have warned that if the furlough scheme is not extended, the country may face a second wave of job cuts.
According to business groups, the UK risks additional job cuts and a slower economic recovery if it fails to extend the current furlough scheme.
Extending the UK furlough scheme
The Coronavirus Job Retention Scheme allows employees placed on leave to receive up to 80% of their pay, up to a maximum of £2,500 a month. Initially paid by the government, firms are now contributing part of the wages for those under the scheme.
Almost 10 million workers have benefited from the program but it will end on October 31.
Manufacturing body Make UK argued that the furlough scheme should be extended beyond October for sectors that have been hit hard by the effects of the coronavirus pandemic and are already experiencing workforce reductions.
Make UK conducted a survey of over 200 manufacturing firms and found that more than 60% wanted the scheme extended for strategic industries, including aerospace and car manufacturing.
The group also mentioned that Germany, Belgium, Australia and France, have all made extensions or created new wage support schemes that would be in effect until next year.
Make UK chief executive Stephen Phipson said: "The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running."
"The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest. Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so."
Meanwhile, the Confederation of British Industry (CBI) said a replacement was needed to avoid a "cliff edge".
Head of the CBI Dame Carolyn Fairbairn explained that while the furlough scheme had been expensive, it was "an absolute lifesaver" and more help was needed.
She also mentioned that around 25% of businesses in the hospitality, retail, leisure and travel sectors are facing the possibility of insolvency.
Fairbairn said: "Many companies will find that cliff edge very difficult to manage… it's too soon to pull business support away at the end of October."
However, the British Prime Minister has refused to grant an extension to the scheme, arguing that it would only keep workers "in suspended animation".
Unemployment to surge
Thanks in part to the furlough scheme, the UK unemployment rate has remained at 3.9% since the lockdown was started. However, the Bank of England expects the rate to double to 7.5% by the end of the year as the scheme ends.
Several companies have already announced thousands of job cuts, including Rolls-Royce, Costa Coffee, Pret A Manger, Pizza Express, British Airways and BP.
A Treasury spokesman said: "The Coronavirus Job Retention Scheme will have been open for eight months from start to finish - with the government helping to pay the wages of over 9.6 million jobs so far."
"But we've been clear that that we can't sustain this situation indefinitely and must now focus on providing fresh work opportunities for those in need across the UK," the spokesman added.
He continued: "We will continue to support businesses bringing back staff through the £1,000 job retention bonus, while our Plan for Jobs will drive our economic recovery by creating new roles for young people and new incentives for training and apprenticeships."
