Furloughing in the UK - what is the current situation?

[Baxenden Bank]

Let’s face it, Cafe Rouge and Pizza Express are two lacklustre chains that have been close to going to the wall for ages.

I’ll be amazed if either survives this pandemic.

There are a lot of businesses out there which were teetering on the edge (perhaps due to excessive debt owed to a linked company, paying over the odds interest and never paying down the debt!). Coronavirus is a convenient peg to hang a business failure on. I can't remember which chain it was but within a couple of days of lockdown they were in administration and blaming it on Coronavirus. Fair enough they were wise to see the impact and act immediately, but any well run business (or a persons household finances) should have some reserve for a 'rainy day'. Assuming 10% profit over the preceding 12 months, that should keep you going for 5 weeks, add in future 12 months profit once re-opened - which can be borrowed against, and that gives you 10 weeks no-trading cover. It's simplistic I know but a good starting point for a discussion on 'how well prepared was UK business for some kind of shock to the system'.

I've crunched the BICS survey numbers to produce a time series, showing how sectors have returned to trading after a period of temporary closure. Not necessarily normal trading, but resuming trading from a temporary closure / pause in trading. Not surprisingly, 'accomodation' and 'arts' are still very much 'closed'.

Question: What is the current trading status of your enterprise?
Percentage of all responding businesses, broken down by industry, UK
Status: Enterprise has temporarily closed or paused trading
ie in Wave 2, 22.7 % percent of manufacturing firms were closed, by Wave 8 that is down to near 0%

	Wave 2: 23 March to 5 April 2020	Wave 3: 6 April to 19 April	Wave 4: 20 April to 3 May 2020	Wave 5: 4 May to 17 May 2020	Wave 6: 18 May to 31 May 2020	Wave 7: 1 June to 14 June 2020	Wave 8: 15 June to 28 June 2020
Manufacturing	22.7%​	20.6%​	13.9%​	7.4%​	4.8%​	2.6%​	*
Water Supply, Sewerage, Waste Management And Remediation Activities	8.0%​	10.0%​	2.9%​	4.5%​	0.0%​	1.5%​	0.0%​
Construction	29.1%​	26.1%​	21.6%​	19.1%​	17.0%​	12.0%​	5.5%​
Wholesale And Retail Trade; Repair Of Motor Vehicles And Motorcycles	27.0%​	24.3%​	20.0%​	14.8%​	11.5%​	7.0%​	4.4%​
Transportation And Storage	7.7%​	8.5%​	5.0%​	5.5%​	4.0%​	5.5%​	6.0%​
Accommodation And Food Service Activities	81.2%​	80.6%​	78.1%​	74.1%​	65.3%​	52.7%​	48.0%​
Information And Communication	5.1%​	4.5%​	4.5%​	5.8%​	4.8%​	10.5%​	8.2%​
Real Estate Activities	0.0%​	0.0%​	5.6%​	2.9%​	4.8%​	2.8%​	2.7%​
Professional, Scientific And Technical Activities	3.7%​	3.0%​	3.4%​	2.6%​	2.4%​	7.5%​	4.7%​
Administrative And Support Service Activities	9.6%​	8.1%​	7.1%​	8.6%​	8.7%​	11.8%​	8.2%​
Education	13.8%​	12.6%​	9.8%​	9.4%​	10.4%​	10.5%​	8.4%​
Human Health And Social Work Activities	3.5%​	4.9%​	3.8%​	3.3%​	4.5%​	4.1%​	*
Arts, Entertainment And Recreation	82.2%​	79.5%​	80.1%​	74.6%​	69.8%​	58.6%​	60.4%​
All Industries	24.3%​	22.8%​	20.3%​	17.7%​	15.5%​	13.5%​	10.6%​

 

[Jamesrob637]

Exactly my point - many of these chain restaurants are struggling, and by not reopening in a reasonable timeframe after the government has stated they can - it is surely just them clinging onto life for the benefit of their staff whilst they decide on next steps. After all if they made enough money then they would have already reopened surely?

As an aside, I would be sad to see the back of Pizza Express; it is without a doubt in my mind the nicest food one can buy. Shame the service is so lacklustre.

It's great for a fiver on hotukdeals or O2 Priority but I'd never pay full price in Pizza Express.

 

[Ken H]

I am an IT contractor. I work through an umbrella company. they take the raw cash from the client and deduct tax and NI and pay me, so i am their employee.
From 1/8/20, the employer has to pay the employers NI for furloughed staff. An umbrella company has no income except for their employers fees. no fees, no income.
Agencies are the same.
So from 1st August all sort of temp workers will come off furlough and onto JSA
That will cause a huge leap in unemployment

 

[brad465]

I don't know if this is fully relevant to this thread or warrants its own, but signs of the impacts of mass furloughing and businesses in trouble can be seen in this headline of 1000+ applications for 1 receptionist job:

Almost 1,000 apply for receptionist job in Manchester

With the hospitality sector savaged by the pandemic, jobs are attracting many more applicants.

www.bbc.co.uk

When a Manchester hotel advertised for a receptionist on Monday, the owners were shocked to received almost 1,000 applicants in a day.

They had only expected about 30 people to be interested.

The UK's hospitality sector has been savaged by the coronavirus crisis, with many bars, restaurants and hotels struggling.

I remember seeing a similar report before this of a pub in Wimbledon getting 500 applications for 2 posts, with so many qualified applicants they ended up hiring 6.

 

[bramling]

I don't know if this is fully relevant to this thread or warrants its own, but signs of the impacts of mass furloughing and businesses in trouble can be seen in this headline of 1000+ applications for 1 receptionist job:

Almost 1,000 apply for receptionist job in Manchester

With the hospitality sector savaged by the pandemic, jobs are attracting many more applicants.

www.bbc.co.uk

I remember seeing a similar report before this of a pub in Wimbledon getting 500 applications for 2 posts, with so many qualified applicants they ended up hiring 6.

This is troubling, though it isn’t so novel - for some years the railway has had crazy numbers of applications for many roles, not least train drivers.

 

[Mojo]

This is troubling, though it isn’t so novel - for some years the railway has had crazy numbers of applications for many roles, not least train drivers.

True, although with no disrespect to such people, I can't think there are many people who could say that being a receptionist was their dream job or something they have always wanted to do.

 

[RomeoCharlie71]

Ms Sturgeon is "urging" the UK Government to extend the furlough scheme for up to two years

FM expresses concern over removal of furlough

Michael Blackley of the Daily Mail asks the first minister if she is worried the economy remains so reliant on the furlough scheme.

He highlights figures which show that the number of claimants increased by 45,000 between June and July.

Ms Sturgeon said the removal of furlough is a "significant concern" but it is not a decision that she has any control over.

She urges the UK government to follow the example of Germany by extending the scheme for up to two years.

The first minister says her decision-making at the moment is about "keeping a balance" and warns that the premature return of non-essential office and call centre staff would have a major impact on transmission rates.

 

[Bletchleyite]

I would say there should be a new package. For instance, the entertainments industry direly needs it plus other more direct help. But there is now no sense in having office workers on furlough.

The point of furlough is to "pause" jobs which will have a chance of restarting. If we want to handle the situation of people in jobs which won't be back, e.g. due to the permanent move to online shopping, then improving Universal Credit (and modifying it so e.g. people don't lose their owned homes) is going to be the way to go. And possibly also some job creation, too - let's have park keepers, street cleaners, weeders, lavatory attendants etc back, and in railway terms how about funding an OBS[1] on all DOO trains and a conductor on all trams? How about grants for new small businesses, and rent controls on small business premises? It's better, if these jobs aren't going to come back, to pay people to do something useful than to sit at home.

[1] Or whatever. Let's not make this thread a DOO debate.

 

[Yew]

And possibly also some job creation, too - let's have park keepers, street cleaners, weeders, lavatory attendants etc back,

Wonderful, more unskilled low-paid jobs with no prospects. How about high tech manufacturing instead?

 

[Bletchleyite]

Wonderful, more unskilled low-paid jobs with no prospects. How about high tech manufacturing instead?

How about both? The former are quicker to set up, though.

A park keeper didn't used to be seen in the way you see things, anyway. A park keeper had his park which he took massive pride in keeping well-presented, he didn't drive around in a 4x4 covering a large area, he turned up on his bicycle to the same park every day and he made it really nice. He could perhaps be promoted into other jobs in the local Council, because we didn't outsource those jobs, they were an important part of what the local authority did. Or maybe he'd get promoted to the prestigious, main, big park leading a team of keepers.

The culture is wrong on those sorts of job. We still need them back.

 

[DB]

A park keeper didn't used to be seen in the way you see things, anyway. A park keeper had his park which he took massive pride in keeping well-presented, he didn't drive around in a 4x4 covering a large area, he turned up on his bicycle to the same park every day and he made it really nice. He could perhaps be promoted into other jobs in the local Council, because we didn't outsource those jobs, they were an important part of what the local authority did. Or maybe he'd get promoted to the prestigious, main, big park leading a team of keepers.

Like it or not though, society has changed a lot since then. In particular, the 'job for life' (as some of these were) is a concept which no longer really exists.

 

[Baxenden Bank]

With hindsight, and perhaps foresight (given the extensive epidemic modelling pre lockdown), furlough was too generous. An immediate 'hit' was required to prevent both mass unemployment and mass disobedience (by people who simply could not have afforded to stay away from work). In general terms, the wind down of the scheme should have commenced sooner (June or July rather than August) with a steeper taper.

Once introduced (commendably quickly by the government), the scheme should have been fine tuned - to benefit those sectors continuing to be hit by forced closure (such as hospitality or entertainment). Those areas opened up soonest should have had furlough removed. I would retain elements to protect those in the 'shielding' and 'other vunerable' groups.

As mentioned elsewhere, I think there needs to be some kind of assistance for those now being asked to quarantine on return from abroad, or as a result of local lockdowns, be that geographical or specific premises.

 

[Midnight Sun]

I am an IT contractor. I work through an umbrella company. they take the raw cash from the client and deduct tax and NI and pay me, so i am their employee.
From 1/8/20, the employer has to pay the employers NI for furloughed staff. An umbrella company has no income except for their employers fees. no fees, no income.
Agencies are the same.
So from 1st August all sort of temp workers will come off furlough and onto JSA
That will cause a huge leap in unemployment

Most Agencies did not put their non-working clients on furlough, zero hours contracts mean just that. Unemployment went up by over million within weeks of the start of the shut down.

 

[scotrail158713]

Ms Sturgeon is "urging" the UK Government to extend the furlough scheme for up to two years

It’s worrying if she genuinely thinks that. Although I suppose it’s an easy move to make to try and improve her image, as ultimately it has nothing to do with her.
I am worried she’ll use it as another way to try and turn us up here away from Westminster and towards independence though.

 

[Bletchleyite]

Like it or not though, society has changed a lot since then. In particular, the 'job for life' (as some of these were) is a concept which no longer really exists.

And as a result low-paid, basic physical jobs are broken - because they have no pride associated in them any more. How's about we fix them?

 

[DB]

And as a result low-paid, basic physical jobs are broken - because they have no pride associated in them any more. How's about we fix them?

Not sure that it's even possible now!

 

[Crossover]

Ms Sturgeon is "urging" the UK Government to extend the furlough scheme for up to two years

I wonder how she would feel about paying for it

It seems she is comparing it to the German system, but theirs is somewhat different anyway, I believe

I would say there should be a new package. For instance, the entertainments industry direly needs it plus other more direct help. But there is now no sense in having office workers on furlough.

Agreed - I had a similar discussion with some forummers a few weeks ago. In truth, I feel that for a number of industries, the extention through to October is too long, even with the slight cost to the business itself now, whereas for some industries you mention it likely isn't long enough.

How such a scheme would be workable, I don't know (that'd be for those at 'the top' to work out) but surely there is sme way to have a graduated scheme and coax businesses into doing business, rather than taking the seemingly easy option

 

[HSTEd]

And as a result low-paid, basic physical jobs are broken - because they have no pride associated in them any more. How's about we fix them?

In that case pay in those jobs has to escalate until people actually want to do them.

The UK economy is rather dysfunctional, I am told we are short of workers and yet we have a lot of industries operating in a very labour inefficient fashion. Which is it?

 

[DB]

In that case pay in those jobs has to escalate until people actually want to do them.

The UK economy is rather dysfunctional, I am told we are short of workers and yet we have a lot of industries operating in a very labour inefficient fashion. Which is it?

One of the reasons it is so dysfunctional is that house prices have risen so that they bear no resemblance to earnings in many areas, hence housing costs as a proportion of income have gone up considerably over the past few decades.

This is what happens when housing is seen as an investment or a way to profit from the work of others, rather than as somewhere to live, and is partly driven by the need for economic growth in a country which produces less and less. There's inevitably a limit to how long the economy can grown when a significant driver is flogging overpriced houses to each other.

 

[Midnight Sun]

In that case pay in those jobs has to escalate until people actually want to do them.

That's due to pay levels in these jobs dropping. Take farming for example, they prefer to inport cheap labour for they make more money this way. Farm staff used to have tied homes, not anymore, Now the staff are packed in huts or caravans 4 to 8 in each one. These staff are than charged for this housing, which is deducted (£80-£100 per week) from the pay packet. Farmers require staff to live on site even if they are only living next door. Many of the processing and packaging units also have the staff living onsite as a requiertment of the job. This also happen at the London 2012, the paid staff were required to live onsite in dorms.

IF you own or rent your own home and even have family, The low paid cannot afford to pay for two lots of housing. Hence the shortage of workers.

 

[HSTEd]

IF you own or rent your own home and even have family, The low paid cannot afford to pay for two lots of housing. Hence the shortage of workers.

Then wages should rise.
Deliberately suppressing wages by importing vast numbers of very cheap workers is not a sensible long term strategy.

 

[yorksrob]

Rather than extending it as is, furlough should be geared towards supporting people in employment. Instead of paying people to stay at home, it should contribute to their post in employment.

 

[Iskra]

Rather than extending it as is, furlough should be geared towards supporting people in employment. Instead of paying people to stay at home, it should contribute to their post in employment.

That sounds like flexi-furlough, which my company is currently using. The company gives employees the work it can at 100% pay and then the government is paying the rest of their contracts at 80% of their pay. It's weening our teams off furlough and has worked rather well. In my area we now have most teams working close to 100% of their hours. Unfortunately other areas of our business have been hit worse and are more reliant on it still.

 

[Midnight Sun]

Then wages should rise.
Deliberately suppressing wages by importing vast numbers of very cheap workers is not a sensible long term strategy.

It is to the employers lining their pockets. You can buy a caravan not longer fit for the road dirt cheap (Less than £500), Park a row of them in a field each with their own water tap connected with a ex hire Shower and loo porter cabin in the middle of the site. With 3 to 6 people per caravan you recover your setup costs in two weeks. Whats needed is a change in the law making it illiegal to force people to live on site unlees there is a need to do so. You recall the ‘Feed the Nation’ campaign, over the shortage of farmer workers due to the East Europeans not coming over. This was rigged as the locals who applyed were never offered a job in the same area, if any offer was made at all, It was 100's of miles away and required to live on site.

https://jacobinmag.com/2020/05/migrant-seasonal-farm-workers-coronavirus-eastern-europe

 

[yorksrob]

That sounds like flexi-furlough, which my company is currently using. The company gives employees the work it can at 100% pay and then the government is paying the rest of their contracts at 80% of their pay. It's weening our teams off furlough and has worked rather well. In my area we now have most teams working close to 100% of their hours. Unfortunately other areas of our business have been hit worse and are more reliant on it still.

One of the weaknesses of the current furlough system is that there is no way to ease the transition back to work for employers.

 

[Iskra]

One of the weaknesses of the current furlough system is that there is no way to ease the transition back to work for employers.

It appears to have worked well in our company.

 

[RT4038]

It is to the employers lining their pockets. You can buy a caravan not longer fit for the road dirt cheap (Less than £500), Park a row of them in a field each with their own water tap connected with a ex hire Shower and loo porter cabin in the middle of the site. With 3 to 6 people per caravan you recover your setup costs in two weeks. Whats needed is a change in the law making it illiegal to force people to live on site unlees there is a need to do so. You recall the ‘Feed the Nation’ campaign, over the shortage of farmer workers due to the East Europeans not coming over. This was rigged as the locals who applyed were never offered a job in the same area, if any offer was made at all, It was 100's of miles away and required to live on site.

https://jacobinmag.com/2020/05/migrant-seasonal-farm-workers-coronavirus-eastern-europe

Is it employers lining their pockets, or consumers lining their pockets? If labour costs rise then prices in the shops are going to rise. Whether the policies are agreed with or not, there has been an overall increase in prosperity for the majority since the 1980s, at the expense of the minority whose wages have dropped. We could reverse this, but do we want to go back to the relative prosperities of the 1970s? Judging by the voting pattern since the 1980s, I guess not.

 

[43066]

Then wages should rise.
Deliberately suppressing wages by importing vast numbers of very cheap workers is not a sensible long term strategy.

Which is why we need a sensible points based immigration system, not the madness of free movement.

Rather than extending it as is, furlough should be geared towards supporting people in employment. Instead of paying people to stay at home, it should contribute to their post in employment.

Agree to an extent: although the business of government shouldn’t be keeping economically unviable jobs propped up.

 

[RT4038]

One of the reasons it is so dysfunctional is that house prices have risen so that they bear no resemblance to earnings in many areas, hence housing costs as a proportion of income have gone up considerably over the past few decades.

This is what happens when housing is seen as an investment or a way to profit from the work of others, rather than as somewhere to live, and is partly driven by the need for economic growth in a country which produces less and less. There's inevitably a limit to how long the economy can grown when a significant driver is flogging overpriced houses to each other.

I think you are right, but it is quite difficult to make any meaningful changes without putting some people into the misery of 'negative equity'.

 

[Midnight Sun]

Is it employers lining their pockets, or consumers lining their pockets? If labour costs rise then prices in the shops are going to rise. Whether the policies are agreed with or not, there has been an overall increase in prosperity for the majority since the 1980s, at the expense of the minority whose wages have dropped. We could reverse this, but do we want to go back to the relative prosperities of the 1970s? Judging by the voting pattern since the 1980s, I guess not.

Its the employer who lining their pockets. When you can recover your housing layouts cost after two weeks, each caravan or hut brings in between £400 to £800 each week when you deduct the housing charge from the pay packet. With other deductions, the weekly pay packet is only about £100, this is still a lot of money to a East European from places like Bulgaria and Romania when taking home, the cost of living in these places is far lower as are the pay rates.

The Nature and Scale of Labour Exploitation Across All Sectors Within the United Kingdom Report by the Gandmaster and Labour abuse Authority 2018