Manufacturers beg government to extend the furlough scheme
More than 50 per cent of manufacturers believe that they will have to make workers redundant in the next six months if the government doesn’t take drastic action to extend the furlough scheme. Bosses predict a slump in demand in the post-COVID period, making job loss inevitable.
The UK, argues an industry representative body, will experience a “jobs bloodbath,” seeing thousands of people from the most deprived communities made unemployed. The report, by Made UK, shows firms ramping up their redundancy plans and preparing for inevitable mass layoffs.
The news comes on top of dire news for the labour market already. The government introduced the furlough scheme in March, but it maintains that it will not be able to save everyone’s job. Unemployment could rise above ten per cent to levels not seen since the 1980s.
Currently, more than nine million people are enrolled on the furlough scheme, but that is set for a rollback in October under current plans. Between now and then, policymakers are scrambling to come up with ideas that will help return the economy to normal before the deadline. Current economic trajectories for job creation suggest that many firms are going to struggle to keep sales high enough to warrant job retention.
Kettering Online – a higher education establishment – says that UK firms need to take lean approaches to manufacturing more seriously if they want to stay afloat. And they are not alone. Downing Street believes that without radical changes to the sector, the long-term health of the economy could be under threat. Currently, around a third of companies plan to cut between 11 and 25 per cent of their workforces. Redundancies are also rising fast, with 53 per cent of companies telling Make UK that they were going to lay people off in the next six months. Only 25 per cent predicted that they would need to make redundancies two months ago.
Sentiment in the sector has also taken a significant knock. Forty-two per cent now believe that it will take longer than 12 months for trading to return to normal. And only 15 per cent say that they are operating at full capacity.
The shape of recovery for the broader economy appears to be V-shaped. Demand, jobs, and incomes are bounding back at a remarkable clip – far faster than many commentators anticipated in March. The manufacturing sector, however, is finding trade sluggish and expects the recovery to be much longer in the industry.
The personal impact on people in the industry is distressing, with many of the most impoverished towns in the country most affected by the fall-out of mass layoffs. The economy as a whole, however, could suffer long-term if high-skill workers find themselves unable to deploy their skills. The UK’s ability to add value in the future might be limited, according to Make UK CEO, Stephen Phipson.
Recently Sir Patrick Vallance – the UK’s top scientific advisor – said that further lockdowns were likely if the virus returned for a second wave. Winter, he says, will be challenging, for industries, like manufacturing.