Yahoo Finance UK reopening sees 1.3 million people taken off furlough
Some 1.3 million Brits were taken off the government’s furlough scheme in March and April as the UK economy started to progress through its roadmap out of lockdown, new data has shown.
This meant that figures fell to their lowest level this year, according to official statistics from HM Treasury published on Thursday, with some of the biggest declines in the under 18s and 18-24 age groups.
Since the start of the pandemic, more than 11.5 million employees and 1.3 million employers have now been supported by the Coronavirus Job Retention Scheme, which will remain in place until the end of September to ensure jobs are protected as businesses get back on their feet from the onslaught of the coronavirus pandemic.
The fall in April was driven by employees leaving furlough in retail and hospitality, the Resolution Foundation said. The number of retail workers furloughed fell by 230,000 to just 600,000 (14% of employees in retail) by the end of April, down by two-thirds since its peak in 2020.
In addition, 180,000 hospitality workers left furlough in April. However, 930,000 hospitality employees (48%) were still furloughed at the end of April.
However, figures still showed that 3.4 million people remained on furlough at the end of April, which has caused concern about unemployment and the country’s economic recovery as job vacancies soar.
Britain's hospitality sector has already been struggling this year with staff shortages as it reopens, forcing pubs and restaurants to offer cash sweeteners to lure workers.
Last month, job postings in some parts of the hospitality industry rose 20% above pre-pandemic levels.
UK pubs and restaurants in particular have blamed both the coronavirus pandemic and Brexit for staff shortages across the industry. The problem has become particularly acute since indoor dining resumed last week as part of the next stage of Britain’s roadmap out of lockdown.
Myron Jobson, personal finance campaigner at Interactive Investor, said: “The harsh reality is not everyone will have jobs to return to as while the furlough scheme protected businesses that, through no fault of their own, were forced to shut up shop during the government enforced lockdowns, it also protected businesses that were already in a precarious state.
Read more: Furlough scheme could 'hinder UK's economic growth' as job vacancies soar
HM Treasury also revealed on Thursday that a total of 2.8 million people have benefitted from the Self-Employment Income Support Scheme (SEISS), which has provided more than £24bn ($bn) in support.
It comes as data from the Office for National Statistics (ONS) showed on Thursday that the number of employees on furlough fell even further in early May, while HMRC data released last month revealed that the number of payrolled staff jumped by nearly 100,000 in April.
The arts, entertainment, recreation and other service activities were the sectors that continued to use furlough the most, with a quarter of the workforce still on the scheme.
HM Treasury said that the government’s Kickstart scheme is also creating thousands of new jobs for young people, and that a range of business grants and loans have provided a bridge so that businesses could make it through the pandemic.
From July, the government will ask employers to make a contribution of 10% towards the cost of paying for unworked hours as the economy reopens and demand returns. This employer contribution will increase to 20% in August and September.
Read more: UK restaurants struggle to recruit after Brexit and COVID double whammy
“Today’s data is another welcome sign that our Plan for Jobs is working and that the route we have taken is the right one,” UK chancellor Rishi Sunak said.
“These figures show the scheme is naturally winding down as people get back to work and take advantage of the opportunities out there in the jobs market.
“We’ll continue to support those who need it through to September but I am hopeful that we’ll see more people moving back into work as we continue on the road to recovery.”
Dan Tomlinson, senior economist at the Resolution Foundation, said: “Employees have clocked up two billion days’ worth of furlough since the start of the pandemic. This shows just how big an impact the pandemic has had on the economy – and how vital the furlough scheme has been in term of preventing mass unemployment.
“But with around one-in-six young workers still on furlough at the end of April, today’s figures are a stark reminder of the risk of rising unemployment when the furlough scheme ends. The government must do all it can to ensure those workers find work as quickly as possible.”
Watch: Bank of England says UK to recover from COVID by end of year
