‘Bonfire of jobs’ in autumn to undermine V-shaped recovery

One in three companies is preparing to cut jobs by the end of September, undermining hopes of a V-shaped recovery as Britain heads for an official recession.

Louisa Clarence-Smith www.thetimes.co.uk 
A survey of more than 2,000 employers found that the number of businesses planning to cut jobs had risen in three months from 22 per cent to 33 per cent.

The quarterly poll by CIPD, the human resources body, and Adecco Group, a recruiter, comes amid growing concerns of a “jobs bonfire” in the autumn. Businesses have to decide whether or not to retain staff who have been on furlough as the government’s job retention scheme starts to unwind before it is terminated in October.

Gerwyn Davies, of the CIPD, said: “Redundancies have been low — no doubt due to the job retention scheme — but we expect to see more redundancies this autumn, especially in the private sector once the scheme closes. Hiring confidence is rising tentatively but this probably won’t be enough to offset the rise in redundancies and the number of new graduates and school leavers entering the labour market.”

Nearly 1,800 companies told the government of plans to cut a total of more than 139,000 jobs in June, according to a freedom of information request by the BBC. Royal Mail, Centrica and the Restaurant Group, which owns Frankie and Benny’s, are among employers planning thousands of job cuts.

The restaurant and casual dining sector has shed 22,000 jobs this year, according to the Centre for Retail Research, which predicts further pain.

Hospitality, transport and retail businesses are most likely to cut jobs, the CIPD/Adecco survey found. Employment confidence is highest in healthcare and public administration.

The survey found that 38 per cent of private sector employers are planning to make redundancies, twice as many as the public sector. A rise in unemployment is likely to be accompanied by a pay squeeze for workers.

Companies planning to carry out pay reviews expect basic pay to rise by 1 per cent, half the 2 per cent median increase expected this time last year.

The economy is set to officially enter recession this week after falling by a record 20 per cent in the second quarter. The latest GDP figures covering April to June will be released on Wednesday, showing that the economy has met the definition of recession by recording two successive quarters of decline.

GDP fell by 2.2 per cent in the first three months of the year. It collapsed by a record 20.4 per cent in April as the lockdown paralysed the economy, before rising by 1.8 per cent in May.

The level of unemployment will be a key factor in determining how quickly the economy recovers.

Simon French, chief economist at Panmure Gordon, said that a V-shape recovery had already looked remote. “This data simply reinforces that picture that is painted by other sentiment data, recent mobility trends and historical responses of businesses and households to recessions,” he said.

Lucy Powell, the shadow business minister, said the government needed to “urgently rethink its rigid approach” to cutting off the furlough scheme in October and called for targeted assistance to help businesses still shut as a result of the pandemic. “They’ve said they can’t save every job but we’re seeing a jobs bonfire,” she said. “They need to target their support at the hardest-hit sectors or be responsible for another wave of mass redundancies.”

Rishi Sunak, the chancellor, said last week that it would not be fair to extend the furlough scheme indefinitely. “We shouldn’t pretend there is in every case a job to go back to,” he told Sky News.

He has set out a “plan for jobs”, including offering a job retention bonus of £1,000 for every furloughed employee retained in January.

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