The end of furlough
Prior to the pandemic, no one had heard of furlough. It was first introduced in the spring of 2020 during the first lockdown in order to support businesses and to protect jobs.
When first launched, the government paid 80% of the wages of people who could not work or where a business could no longer pay them due to Covid restrictions (up to a monthly limit of £2,500). The initial scheme was due to end in June 2021 but one year on it is still in place.
The latest statistics released by the government show that over 11 million jobs have been supported by the furlough scheme (at various times) at a cost of £66bn. The number of people on furlough has decreased by 1.2m with a peak of 5.1m in January 2021.
The scheme has undoubtedly saved jobs during the pandemic, However, after extending furlough several times, the government has announced it will end on 30th September 2021. With the economy opening up and business getting back to work then many people can get back to their jobs.
In order to wind down the coronavirus job retention scheme, the government reduced their contributions to 70% (employers pay 10%) from 1st July 2021. In August and September this will reduce further to 60% (employers will pay 20%).
Some businesses may still find themselves facing financial pressures especially industries still affected such as the travel sector. These businesses may have to look at further cost-reducing exercises such as short-time working and redundancies depending on work demand.
Sean Daniel said “the launch of the coronavirus job retention scheme was a lifeline for many businesses throughout lockdown. It has been in place far longer than anyone expected and has helped businesses to survive during this difficult period”.
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