Quarter of companies will struggle to contribute to furloughed workers' salaries

28 May 2020, 00:04

A poll of 700 businesses using the scheme by the Institute of Directors (IoD) found one in four could not afford any amount
A poll of 700 businesses using the scheme by the Institute of Directors (IoD) found one in four could not afford any amount. Picture: PA
Ewan Somerville

By Ewan Somerville

A quarter of companies which have furloughed staff will struggle to pay their salaries when they are asked to contribute in two months, a study suggests.

Firms will reportedly be asked to contribute 20 per cent of staff wages to the scheme from August until October amid concern among ministers at the spiralling bill for the taxpayer.

But a poll of 700 businesses using the scheme by the Institute of Directors (IoD) found one in four could not afford any amount.

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More than a third of those using the scheme said they would bring most of their furloughed workers back part-time, if it was allowed.

The IoD is calling for ministers to make the scheme more flexible to save employers having to axe the jobs that the scheme is designed to save.

“The furlough scheme is protecting millions of jobs,” Jonathan Geldart, its director general, said.

“Business leaders know that the Government’s support can’t be infinite, but the ugly truth is that if there’s no money coming in the door, many firms will be forced to make difficult decisions come August.

“The Government must soften the blow by introducing as much flexibility as possible into the furlough system. The more flexible the scheme is, the better firms can recover, and the fewer jobs will rely on state subsidy.

“With the prospect of job losses and businesses struggling to create new roles in the months ahead, the spotlight will be on our training system. Businesses are eager to work collaboratively with [the] government to lift skills across the board.”

The scheme, which pays wages of workers on leave because of coronavirus, will be extended to October, with employees receiving 80% of their monthly wages up to £2,500.

The policy has cost more than £11 billion and the bill is expected to hit £50 billion by the end of July.

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Chancellor Rishi Sunak is expected to outline more details on his plea for businesses to contribute to the cost from August, next week.

Len McCluskey, general secretary of Unite, said: “This report bears out what we have been saying for weeks now, that removing the furlough support before business has had a chance to recover even slightly could be disastrous for jobs and workers.”

A Treasury spokesman said: “Our Coronavirus Job Retention Scheme has protected 8.4 million jobs during the outbreak, and we’ve extended it until October to help as many people as possible.

“As the economy reopens and people return to work, we will ensure the scheme supports both businesses and employees in a measured way.”

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