‘Hundreds of thousands of jobs’ could be lost to coronavirus pandemic, sector bodies warn

17 Mar 2020 By Siobhan Palmer

Few firms’ contracts allow for short-term layoffs, say experts, but HR professionals can help sectors such as healthcare and logistics recruit more staff

UK employers have voiced growing concerns about workers’ job security, as the government urges citizens to avoid public gatherings.

Yesterday prime minister Boris Johnson asked people to work from home where possible, cancel all but the most essential travel and avoid public spaces such as theatres, pubs and restaurants.

However, he stopped short of ordering public venues to close and did not offer support to businesses that would see reduced footfall as a direct result of the advice.

Sectors including hospitality, travel and tourism have raised concerns that a dramatic drop in business could leave them unable to pay staff and forced to make redundancies.

Speaking to People Management, Kate Nicholls, CEO of UKHospitality, said that without decisive action to support the country’s cafes, restaurants and bars, the UK could see “potentially hundreds of thousands of jobs lost in hospitality, with considerable job losses coming within four to six weeks”.

“These are exceptional circumstances so we need exceptional support from the government, immediately,” she said. “There can be no half measures during this crisis.”

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Over the weekend, Nicholls wrote to UK chancellor Rishi Sunak, calling for the government to help pay for temporary layoffs through universal credit. She also called for a suspension of business rates for all hospitality companies, regardless of size.

A number of financial measures to support the UK economy were included in last week’s budget. However, the chancellor is expected to make further announcements today.

Emma McClarkin, chief executive of the British Beer and Pub Association, said the coronavirus outbreak had already impacted on the UK’s pubs “with devastating effect”. “The very existence of some pubs is now at threat,” she said.

Noting that pubs employ nearly a million people across the UK, McClarkin said urgent government measures to ensure cash flow and cost reduction for pubs were “of absolute necessity”. “The government needs to give clear instructions and detail on the support package to rescue the sector and hundreds of thousands of jobs,” she said.

Other leisure and entertainment industries have also expressed fears for the future. Yesterday, the Society of London Theatre and UK Theatre announced they were cancelling all shows at their venues, and theatres in their network would close until further notice. In a statement, the body said: “There are more than 290,000 individuals working in the theatre industry across the UK, and the closure of theatres and public venues will have a devastating impact.”

Martin Tiplady, managing director of HR consultancy Chameleon People Solutions, told People Management jobs would also be lost in many sectors beyond hospitality and entertainment. He said it was unsurprising many employers were unprepared to support staff during this unprecedented situation, and that very few companies would have allowed for cost-reduction strategies such as short-term layoffs in employment contracts.

“In that sense, we can anticipate a significant upscale in the number of redundancies over the rest of the year as businesses’ trading becomes affected,” he said. “Governmental help at an extraordinary level will be required if many [businesses] are to survive.”

Last week, British Airways wrote a memo to all staff titled ‘The survival of British Airways’, telling them to expect layoffs as a result of the virus, which Europe is now at the centre of. The airline’s CEO, Álex Cruz, said to staff that job cuts could be “short term, perhaps long-term”, adding that the virus outbreak meant the airline industry was facing a “crisis of global proportions”, BBC News reported.

Many other airlines have also announced large-scale cutbacks to services in the last week, with Virgin Atlantic asking staff to take eight weeks of unpaid leave, according to a memo seen by the Guardian. Norwegian Air has announced it will temporarily lay off 90 per cent of staff as a result of the impact of the coronavirus pandemic on the aviation industry.

By contrast, Amazon has announced it will hire 100,000 warehouse and delivery workers in the US, and increase pay for staff in the UK, US and Europe, to deal with a surge in sales caused by coronavirus. It is hoping to attract people who had been working in the restaurant, travel and entertainment industries but are now out of work. 

Tom Hadley, director of policy and campaigns at the Recruitment & Employment Confederation (REC), said businesses needed to “take a proactive approach to both protecting their staff and preparing for a future where we will all have to be more flexible about the ways we work”.

According to the REC, four in five recruiters expect the outbreak to have an adverse impact on hiring in the short term. However, reiterating that some sectors – including health, social care and logistics – have been looking for more staff in the past few weeks, Hadley said recruiters and agency staff would play a crucial role in helping these employers meet increased demand.

Hadley added that he supported calls for greater government assistance for companies experiencing cash flow issues because of coronavirus. “This means covering sick pay, deferring VAT and PAYE payments, and suspending the upcoming tax changes until normality resumes. This will help to keep people in their jobs and allow firms to start hiring again,” he said, adding that this should include a pause to changes to the private sector IR35 off-payroll rules.

More than 1,500 people have now tested positive for coronavirus in the UK, and 55 have died from the virus.

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