More than half of furloughed employees have returned to work, analysis suggests

But experts warn of significant redundancies over the coming months now employers are expected to contribute to government-subsidised wages

More than half of furloughed workers have now returned to work, according to an estimate produced through analysis of official figures.

Figures from HMRC showed that, as of 26 July, 9.5 million people had been placed on furlough. However, analysis by the Resolution Foundation suggested fewer than half that number were still on the job retention scheme today.

The research, based on three separate surveys by the Office for National Statistics, estimated that the actual number of people on furlough as of the beginning of August was likely to be below 4.5 million and could be as low as three million.

Dan Tomlinson, senior economist at the Resolution Foundation, said it was “misleading” to say that nine million people were currently furloughed, estimating that the number of workers on the job retention scheme at any given time peaked at eight million. 

“The [scheme] has supported around a third of the private sector workforce at some point since lockdown began, protecting family incomes and preventing catastrophic levels of unemployment,” Tomlinson said. “But while furloughing is currently far less widespread than commonly claimed, there are still millions of employees without work, particularly in the hospitality and leisure sectors.”

The release of these figures coincided with the beginning of the next phase of the furlough scheme. As of Saturday (1 August), employers were required to pay national insurance contributions for furloughed employees. This is set to increase again from 1 September, when employers will also be asked to contribute at least 10 per cent of furloughed employees’ wages, going up to 20 per cent in October, the last month of the scheme.

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David D'Souza, membership director at the CIPD, said there was "no doubt" this was a difficult time for most organisations, with the impact of the global pandemic on firms "almost inescapable".

"While it's natural for employers to feel they're almost catching up with where they've been, this next phase of the job retention scheme will have a different commercial and people impact on businesses," D'Souza explained. "There are obligations on the part of employers and HR to look at the sustainability of the organisation, look at the economic reality that most organisations find themselves operating in and communicate very clearly with staff as to what's going on."

The Resolution Foundation report said the threat of significant redundancies loomed for the hardest hit sectors as the job retention scheme was phased out between August and October. The report estimated that 43 per cent of workers in leisure, 37 per cent in hospitality and 24 per cent in transport and storage were still furloughed in late July. As such, the think tank has called on the government to address a rise in unemployment in hard-hit sectors by phasing out furlough support more slowly than currently planned. 

The think tank said the changes to the scheme now in motion would cost employers an average of £70 per month per employee – equivalent to 5 per cent of the average employee’s wages before the coronavirus pandemic. 

The Federation of Small Businesses (FSB) also warned the changes to the scheme would result in more businesses being forced to make workers redundant and would drive up unemployment. It said more government help was needed to save jobs. Mike Cherry, chairman of the FSB, said the government’s promise to give firms £1,000 for every employee brought back from furlough was welcome. But the funding “won’t manifest until next year [and] jobs are being lost today”, he warned.

“Even with critical emergency measures in place, jobs are sadly being lost in the here and now. As we look to the autumn, it’s clear that we cannot afford to pull up the business support drawbridge any time soon.”

While employers might be unable to control the economic impact of the pandemic on their organisations, people professionals should ensure they communicate "effectively and with the dignity that people deserve", said D'Souza.

"Communication is within the control of most organisations. They may not be able to control the health situation or the economic situation, but they can control to some degree how they treat people, how they care for them and how they communicate with them."

If the business was not planning redundancies, HR should ensure staff were made aware their role was "not under threat”, he said.

Where organisations were having to cut jobs, people needed to understand the challenges the business faced, the potential consequences of those challenges and that the decision would be made not only by HR but also senior leadership, D'Souza advised.