A freedom of information request has revealed that UK redundancies have reached almost 500,000 for the first five months of the coronavirus pandemic.
The figures showed that UK companies planned 58,000 redundancies in August, bringing the total to 498,000 since the coronavirus pandemic began. Around 966 UK employers have notified the government of plans for job cuts of 20 or more, compared to 214 in August 2019.
However, the number of redundancies actually fell during the month compared to levels observed in June and July, when 150,000 job cuts were reported during both months.
Planned redundancies in the UK
While the British economy is recovering from the unprecedented economic downturn earlier this year, a number of large companies from the hardest-hit sectors, including retail and restaurants, have announced redundancy plans, such as Debenhams, DW Sports, Marks & Spencer, Pret a Manger, currency exchange company Travelex, and WH Smith.
In August, international sandwich shop chain Pret A Manger announced that it will layoff more than a third of its employees or around 3,000 job cuts, as part of a plan to save the business.
Pret A Manger said the job cuts will mainly affect workers at its shops but it will also layoff 90 employees at its support center. Because of the pandemic, demand from commuters and office workers, a crucial market for the chain, plunged dramatically.
Earlier this summer. the sandwich chain said it would permanently shut down 30 of its stores.
Pret A Manger chief executive officer (CEO) Pano Christou said he was “gutted” to lose so many colleagues.
Christou explained: “Although we’re now starting to see a steady but slow recovery, the pandemic has taken away almost a decade of growth at Pret. We’ve managed to protect many jobs by making changes to the way we run our shops and the hours we ask team members to work.”
“I’m hopeful we’ll be able to review all these changes now that trade is improving again,” he added.
The 58,000 redundancies announced in August were considerably lower than previous months, but still represent an over 150% increase on the previous year.
Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, said: “There was a sense of optimism in August, we were starting to see more spending and more activity, there were hopes for a quick recovery. That seems a lot less likely now.”
End of furlough scheme and new strategy
Two weeks ago, Chancellor Rishi Sunak unveiled a new emergency jobs strategy that will replace the current furlough scheme, called Coronavirus Job Retention Scheme.
According to Chancellor Sunak, the new emergency jobs scheme, dubbed the Jobs Support Scheme, will enable workers to receive three quarters of their normal salaries for six months.
It is aimed at preventing mass job cuts following the UK government’s introduction of new measures to address the increase in coronavirus cases. Sunak said it was part of a wider “winter economy plan”.
However, British think tank Resolution Foundation warned that the new jobs support scheme will not be able to stop “major” increase in unemployment in the UK.
Resolution Foundation claims that Chancellor Sunak’s new scheme will only be able to slow down job losses but won’t be able to halt a major surge in unemployment in the UK.
The think tank pointed out that firms would have “little or no incentive” to use the new scheme because they had to pay employees for hours not worked. It said that the plan “will not significantly reduce the rise in unemployment.”
The Foundation also mentioned that approximately six million of the UK’s poorest households could face a reduction in income of up to £20 a week when the government’s temporary support to basic benefits ends in April 2021.