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WHAT ARE THE LONGER TERM EFFECTS OF FURLOUGH?

  • Publish Date: Posted 26 days ago
  • Author: Michael Ball

When the country was initially plunged into lockdown in March, the furlough scheme – which saw the Government foot the bill for up to 80% of an employee’s wages – was largely heralded as a lifesaver by many businesses who had seen their revenue stop, or at the very least slow down, overnight.

The scheme, which has seen the Government’s contribution reduce over of the last couple of months, was set to end on 31 October yet, this weekend’s announcement that we are again facing another period of lockdown which will force many businesses to close their doors was accompanied by the news that furlough would continue – back at its original level – until at least the end of this month.

Since its introduction in March, the Coronavirus Job Retention Scheme has supported 9.6 million jobs with 1.2 million employers making claims totalling £41.4bn (and counting).[1]

Many employers have already taken tough decisions in view of the expected end of furlough; redundancies increased in June to August 2020 by 113,000 on the year, and a record 114,000 on the quarter, to 227,000. The annual increase was the largest since April to June 2009, with the number of redundancies reaching its highest level since May to July 2009.[2]With still so much uncertainty, what do the coming months and beyond bring for businesses as they prepare to potentially welcome back employees who have spent some – or all – of the last seven months away from the work place?

It is worth bearing in mind that whilst COVID-19 is indeed a significant global pandemic affecting each and every one of us in some way, from a business perspective, not every sector is being affected to the same degree and, in fact, there are many industries which are experiencing growth. This – in some cases very rapid – growth has seen these companies face staffing challenges of a different kind as they look to recruit and build their teams to manage the increases in demand in a market that looks and feels very fluid and in many ways unfamiliar.

Furlough – in addition to providing financial support – has also enabled businesses to benefit in other ways; for some, this has afforded them with some much needed breathing space to reassess their operations, consider their costs moving forward and review roles and departments in preparation for whatever lies ahead.

Inevitably – and unfortunately – there have been job losses, and no doubt there are more to come as businesses restructure and take a much closer look into their systems and operations as they seek to improve efficiencies, some of which may have previously been put on the back burner whilst the primary focus was concentrated on the ‘day-to-day’ yet lockdown forced those considerations – namely working from home – to become an immediate necessity.

As we move forward, it is likely that an increasing number of organisations will see home working – at the very least a mix between home and office working – become the norm. Work from home policies which may have been rapidly introduced in response to the initial lockdown will need further review and the correct provisions and equipment supplied to support a longer term and more permanent change to working patterns.

For those businesses bringing employees back into work, they must have in place a proactive programme to manage the reintroduction of those individuals and their reintegration with those who have remained working throughout the duration. For many, furlough was a case of ‘the grass is greener’; for those continuing to work they may have felt resentment that they were covering for colleagues who were ‘enjoying’ time off whilst still receiving a large proportion of their monthly wage whereas those on furlough will have experienced feelings of uncertainty that the longer they spend out of the work place the more dispensable they become and the adverse affect of a lack of mental stimulation and day to day routine on their general well-being.

Companies must recognise that this is a critical time and ensure that they have taken into consideration how various roles may have needed to be adapted and communicated changes clearly and concisely. How companies handle their employees over the coming weeks and months – and indeed how they ensured that those who were on furlough remained engaged with the operation during their time away – will have significant implications for businesses as they move forward.

Businesses’ objectives will have undoubtedly had to change and adapt and alongside those, it is very likely that for many employees, they may find that their individual pre-lockdown career ambitions take something of a back seat. That is not to say that there are not opportunities for progression and promotion; some sectors are growing and over performing resulting in new and challenging roles opening up for those candidates seeking their next career move.

With a reasonable amount of uncertainty surrounding how business will be able to move forward remaining, many may understandably feel tentative about pressing ahead with recruitment plans. However, considering alternative solutions such as bringing somebody in on an interim basis, may buy businesses the time that they need before making a more permanent decision. Options which may previously have been considered unworkable could now very much be on the table; we recently placed an individual into a senior commercial finance role who, during the process, advised that they would be relocating away from the area. Pre-lockdown this would have almost certainly been a deal-breaker, however with successful home working strategies deployed, being based full time in an office is no longer seen as a barrier to securing the right candidate 

However, even within those sectors for which the coming months and beyond may be difficult, it is vital that employers engage with their employees respectfully so as to ensure open two-way communication and foster a positive culture that encourages retention. Employers may be seen to be in the driving seat – the unemployment rate grew to 4.5% in the three months to August 2020 compared to 4.1% in the previous quarter [3]– yet, as the market swings round, businesses may find themselves facing challenges around retention – and potentially recruitment – as their actions now influence the decisions current and potential employees make in the future.

Sharp Consultancy specialises in the recruitment and executive search of finance and accountancy professionals.  With offices in Leeds and Sheffield our highly experienced team of consultants recruit for temporary, interim and permanent roles across the full spectrum of positions throughout Yorkshire and beyond. CONTACT UStoday and speak to a member of our team about your recruitment needs or next career move.


[1]
HMRC coronavirus (COVID-19) statistics, https://www.gov.uk/government/collections/hmrc-coronavirus-covid-19-statistics, published 22 October 2020

[2]
ONS Labour market overview, UK: October 2020

[3][3]
ONS Labour market overview, UK: October 2020