Employer efforts helped curb Covid redundancies, figures suggest

Official statistics indicate a rise in workless households, but experts say pay freezes and redeployment have lessened the ‘worst effects’ of the pandemic

The latest official employment figures suggest efforts by employers to avoid redundancies caused by the economic fallout of coronavirus have been paying off, experts have said, despite a rise in the number of workless households.

Figures released today by the Office for National Statistics have shown between July and September this year, there were 2.7 million workless households in the UK – 13.4 per cent of of the total – reflecting an increase of 20,000 on the same period in 2019.

The figures also showed a drop in the number of households where all adults were in work, down from 12.5 million to 12.2 million, equivalent to 58.9 per cent of households. Similarly, the proportion of households where at least one adult was out of work rose from 26.9 per cent in 2019 to 27.7 per cent this year – with 153,000 additional homes falling into this category.

However, Gerwyn Davies, senior labour market analyst at the CIPD, said it was apparent that efforts by employers to lessen the impact of redundancies on staff – including pay freezes, recruitment freezes and redeployment – were working.

“The labour market was in a very strong position before the pandemic. Government and employer efforts have helped mitigate the worst impacts of Covid and hopefully that will curb the number of workless households in the future,” he said.

Davies still expected an “inevitable” increase in the number of workless households over the next year, but said: “With the help of the job retention scheme and employer effort to minimise redundancies, as well as the new measures the government looks set to introduce today, hopefully the worst effects of the pandemic will be mitigated against.”

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He added that the extension of the furlough scheme until March 2021 will have made a difference to some businesses – especially those in sectors affected by the most recent lockdown. “But it certainly won’t stop the sharp rise in redundancies that we've seen recently continuing well into next year,” he warned.

Separate figures released by HMRC today showed the number of people on furlough continued to fall in September, down to 2.4 million from a peak of 8.9 million in May. Figures were not yet available for October – which was originally intended to be the final month of the scheme – or for November, when the scheme was extended until March.

The report said that, in September, 45 per cent of employers in the arts, entertainment and recreation sector, and 41 per cent of those in accommodation and food services, were using the furlough scheme.

Meanwhile, the Recruitment & Employment Confederation’s latest JobsOutlook report warned that confidence among employers was falling. The report, covering the three months to October, found employers’ confidence in their ability to make hiring and investment decisions dropped by five percentage points compared to the previous quarter.

A growing proportion of firms were turning to temporary workers, with short-term demand for agency workers rising by three percentage points, it said.

Matt Weston, managing director of Robert Half UK, commented: “Covid-19 has unfortunately impacted the jobs market in 2020, but we are starting to see green shoots rising ahead of the new year. Nearly nine in 10 companies still plan to hire new staff between now and the end of December.”