Manufacturers Seek U.K. Furlough Extension as Job Losses Loom

U.K. manufacturers called on Chancellor of the Exchequer Rishi Sunak to extend his flagship furlough program amid warnings that almost a third of companies plan to cut jobs in the next six months.

A survey of 226 employers by industry group MakeUK found 62% want the program, under which the Treasury has paid as much as 80% of wages, to be extended beyond the end of October. With 30% of respondents saying they intend to cut workers, extension of the plan could avert a “wave of redundancies,” the group said.

“The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running,” MakeUK Chief Executive Stephen Phipson said, urging “the greatest support possible” from the government.

With Germany extending its equivalent program until the end of 2021, and France also considering an extension, Sunak has come under pressure to continue to subsidize wages beyond Oct. 31, when the program is scheduled to end.

“The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest,” Phipson said. “Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so.”

The opposition Labour Party has criticized the U.K.’s “one size fits all” approach, and economists have warned the premature removal of support threatens to send unemployment above 3 million before the end of 2020.

MakeUK said the automotive and aviation sectors are most in need of a furlough extension in order to protect key skills and research and development investment worth 5.9 billion pounds a year to the U.K. economy. The industry group’s survey also found that:

  • 69% of manufacturers currently have staff on furlough
  • 37% think it will take more than a year for trading conditions to return to normal
  • 18% are now operating at full capacity
  • 42% have already cut jobs because of the pandemic
  • 30% plan to cut jobs in the next 6 months, while a further 36% may do so

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