Report explores employer views on Minimum Wage

New research shows there is broad employer support for further increases to the minimum wage, but that government must help businesses to adapt to a higher wage floor.

The report – based on a survey of over 1,000 businesses conducted at the outset of the coronavirus crisis – shows that over half (54%) support the UK government’s policy of increasing the national living wage to two-thirds of median income by 2024, with fewer than one in ten (9%) opposing this move.

The report – produced by Learning and Work Institute and Carnegie UK Trust – finds that most employers said that the increase would not have a negative impact on their business, or on wider UK employment. A majority (54%) of businesses said that a higher minimum wage could help boost UK productivity.

The report showed that there was more concern among the employers that would be most impacted by an increase in the minimum wage, and among the sectors hit hardest by coronavirus.

Over half (55%) of employers with higher levels of low pay said the planned increase in the minimum wage would have a negative impact on their business, nearly double the figure for all employers (29%). Employers in hard hit sectors such as hospitality (41%) and retail (38%) were also more likely to fear a negative impact on their business.

While half (50%) of businesses said that they would not need to do anything to respond to a higher minimum wage, some employers said they would have to make changes which could have implications for consumers and workers:

  • 22% of businesses said they would pass the cost on to consumers;
  • 15% would hire fewer members of staff;
  • 10% would increase the use of temporary or flexible contracts;
  • 10% would also reduce staff benefits such as bonuses, breaks and discounts.

Most employers believe additional government support would be necessary to help employers manage an increase in the minimum wage. The most popular measure was additional help to invest in skills and training (supported by 37% of employers) followed by a temporary reduction in national insurance contributions (33%). Just one in six (17%) said government should not provide any support to employers.

Joe Dromey, deputy director for research and development at Learning and Work Institute, said: Increasing the minimum wage could eradicate low pay, and help to tackle in-work poverty. Our research has shown that not only is a higher minimum wage popular among workers – it is supported by most employers too.

“The government can still deliver on their commitment to increase the minimum wage. But with higher unemployment as a result of the coronavirus crisis, we need to ensure that employers are supported to adapt.”

Douglas White, Head of Advocacy at the Carnegie UK Trust, said:That most employers support a higher minimum wage is encouraging: even before the onset of the pandemic, there were too many workers struggling on low pay.

The economic challenges caused by COVID-19 means it is even more important that future decisions around the minimum wage are ambitious in delivering better pay for low paid workers, while recognising the real challenges that many businesses are experiencing and providing them with essential support. 

We hope the ideas put forward in our employers’ survey are a helpful starting point for a dialogue about how the government can pursue its ambition to raise the wage floor without endangering job quality or employment.’  

In our next and final report in the Future of the Minimum Wage series, we will set out recommendations for how government can achieve a balance between raising the wage floor, locking in job quality and protecting employment for more workers.

We would be pleased to hear your views on the findings of the report and the future of minimum wage policy in the UK.

You can get in touch with us on Twitter @CarnegieUKTrust, using the hashtag #MinimumWage, or you can let us know your thoughts by emailing Gail Irvine, Senior Policy and Development Officer, on gail@carnegieuk.org.

Is going back to the office a good idea?

ISG research reveals workplace preferences depending on personality types 

For 55% of the UK office workers having plenty of natural light is the main workplace priority

Edinburgh, London, and Birmingham office workers have the highest workplace satisfaction in the UK

To help businesses and employees navigate uncertainty over the future of workplace, ISG paired up with a clinical trainee psychologist to develop a personality test that reveals workplace preferences based on people’s character traits.

As restrictions slowly ease and businesses resume, both employers and employees face the question about the future of workplace. ISG, a global construction specialist, conducted a survey of 5,779 office workers in the UK, Germany, Spain, Hong Kong, Singapore, and Malaysia to better understand the power of workplace prior to the lockdown.

The survey indicated that plenty of natural light (55%), plenty of fresh air (48%) and being able to work from home or outside of the workplace (45%) came on top as the main employee priorities for UK workers. 

In terms of the regional split, employees working in Edinburgh tend to have the highest satisfaction about their workplace conditions (63%), followed by London (55%) and Birmingham (53%). However, employees working in Cardiff are least satisfied by their workplace with only 37% confirming so.

Taking into account the research findings, ISG collaborated with Hannah Baker, a trainee clinical psychologist, to discover ways in which employees’ personality traits can be indicators of their preferences for office or remote working.

By using the Big Five personality theory as the foundation, the test outlines ten statements that are based on five main dimensions of an individual’s personality – extraversion, agreeableness, conscientiousness, stress and openness to experience.

Respondents are asked if they agree with the statements and depending on the number of positive responses they are sorted in three workplace personality types available on https://www.isgltd.com/en/campaigns/workplace-personality-types

Hannah Baker, a trainee clinical psychologist, said: “When considering your workspace, it is important to remember that all people respond to their environments differently.

“It can be helpful to think about where your motivation comes from – some people are motivated internally, while others respond to external factors. Also, understanding how other people impact your work can help.

“Individuals who are more introverted might find thinking independently in a quiet space most helpful. Extroverts, however, might prefer a busy office space, where they can exchange ideas and information with others.”

To find out more about the research and access the workplace personality test, please visit https://www.isgltd.com/en/campaigns/workplace-personality-types.

Great jobs that don’t require a degree

According to teen magazine Future-Mag, more than half (54 per cent) of graduates say they’d think again about choosing university as the best way to find a job. 

If you don’t fancy another three years of study, can’t face the debt, or didn’t get the results you were expecting, don’t worry. There are plenty of routes into careers that that don’t require you to have a degree.

These new opportunities are partly thanks to a rise in apprenticeships since the government has invested more in professional training. 

Here’s a line-up of some top jobs you can do without a degree:

1.       Nurse

The Lowdown

If you’ve been thinking of becoming a nurse but don’t want to go to university full-time this could be for you. The government has just announced a massive £172m investment into nursing, the money is to allow healthcare employers to take on up to 2,000 nursing degree apprentices every year over the next four years.

Getting There

Nursing apprenticeships offer an alternative to full-time university courses, allowing people to earn a salary while their tuition costs are paid.  At the end of the apprenticeship – which usually takes four years – apprentices are able to qualify as fully registered nurses.

You’ll usually need 4 or 5 GCSEs at grades 9 to 4 (A* to C) and A levels, or equivalent, for a degree apprenticeship. Pay: £24,907 to £37,890

2.       Air Traffic Controller

The lowdown

24 hours a day, they help to keep some of the busiest airspace in the world moving. The work is challenging and demanding, but it’s immensely rewarding too. Air traffic controllers give information and advice to airline pilots to help them take off and land safely and on time.

Getting There

You have to be over 18 and have at least five GCSEs or equivalent at Grade 4 or above (previously A-C) or Scottish Nationals 5 Grade A-C or equivalent, including English and maths. As well as having a good level of physical and mental fitness, you must satisfy the basic medical requirements set down by the Civil Aviation Authority.

The National Air Traffic Control Service (NATS) has developed a series of games to help gauge whether you’re right for this career. Pay: £17,000 to £50,000

3         Solicitor 

The lowdown
It’s not quite ‘Better Ask Saul’… in reality Solicitors advise clients about the law and act on their behalf in legal matters, and can specialise in a host of areas, including contract, criminal, commercial and family law, and much more. 

Getting there

You can now become a solicitor by training on the job since new solicitor apprenticeships (level 7) which were approved in 2015. This isn’t an easy route – you’ll need to pass a series of tough exams. You’ll need good A levels and it can take five to six years to complete. Pay £25,000 to £100,000

4         Visual Effects Artist

The lowdown

They help artists produce all the whizzy visual effects (VFX). They assist senior VFX artists and prepare the elements required for the final shots. Eventually they’ll be employed by post production companies working on commercials, television series and feature films.

Getting there

You could do a practical short course at London’s MetFilm School  (Ealing Studios) and try to get into the industry that way, or do an apprenticeship via Next Gen

Pay from £18,000 to £50,000 once qualified

5         Computer forensic analyst (cyber security)

What do they do?

Investigate and thwart cyber crime. They might work for the police or security services, or for computer security specialists and in house teams. They’ll follow and analyse electronic data, ultimately to help uncover cyber crime such as commercial espionage, theft, fraud or terrorism.

Getting there

Cyber security professionals are in high demand in both the public and private sector in the wake of high level breaches and perceived terrorism threats. And there’s a severe shortage of qualified professionals. Cyber security higher apprenticeships (level 4) are offered by major infrastructure and energy companies and – excitingly – the security services. Pay £20,000 to £60,000

6         Estate Agent

The Lowdown
An estate agent’s lot isn’t quite as chaotic as the comedy ‘Stath Lets Flats’, might lead you to believe, in reality, estate agents sell and rent out commercial and residential property, acting as negotiators between buyers and sellers.

Getting there
Some estate agents offer an intermediate apprenticeship as a junior estate agent, or you may be able to start as a trainee sales negotiator and learn on the job.

PayEstate agents often work on commission which means that you have a basic salary and also earn a percentage of the sale or rental price of any property you sell or rent. £15,000 to £40,000

7         Police Officer

The lowdown
This is another profession where the Government has pumped in large amounts of cash to help recruit new coppers. If you’ve been considering this as a career, now could be the right time to apply. Police officers keep law and order, investigate crime, and support crime prevention.

Getting there
There is no formal educational requirement, for direct application but you will have to be physically fit and pass written tests. Or, you could start by doing a police constable degree apprenticeship. You’ll usually need: 4 or 5 GCSEs at grades 9 to 4 (A* to C) and college qualifications like A levels for a degree apprenticeship.

You can get a taste of what it’s like to work with the police by volunteering as a special constable.

You could also get paid work as a police community support officer (PCSO) before applying for police officer training. Pay £20,000 to £60,000

8         Computer forensic analyst (cyber security)

What do they do?

Investigate and thwart cyber crime. They might work for the police or security services, or for computer security specialists and in house teams. They’ll follow and analyse electronic data, ultimately to help uncover cyber crime such as commercial espionage, theft, fraud or terrorism.

Getting there

Cyber security professionals are in high demand in both the public and private sector in the wake of high level breaches and perceived terrorism threats. And there’s a severe shortage of qualified professionals. Cyber security higher apprenticeships (level 4) are offered by major infrastructure and energy companies and – excitingly – the security services. Pay £20,000 to £60,000

9         Public Relations officer

The Lowdown
Public relations (PR) officers manage an organisation’s public image and reputation. You migh get involved in planning PR campaigns, monitoring and reacting to the public and media, writing and editing press releases, speeches, newsletters, leaflets, brochures and websites, creating content on social media much more.

Getting there
There is no set entry route to become a public relations officer but it may be useful to do a relevant subject at college, like a Foundation Certificate in Marketing.
You can work towards this role by doing a public relations assistant higher apprenticeship.

Entry requirements
You’ll usually need: 4 or 5 GCSEs at grades 9 to 4 (A* to C) and A levels, or equivalent, for a higher or degree apprenticeship. Pay £18,000 to £90,000

10     Youth worker

What do they do?

Work with young people and help them develop personally and socially. They might work with local services, youth offending teams or voluntary organisations and community groups. They might help organise sports and other activities, or be involved on counselling and mentoring, or liaising with authorities.

Getting there

Many enter youth work as a volunteer or paid worker, but you can now qualify via a youth work apprenticeship. Pay £23,250 to £37,500

11     Army officer 

The Lowdown
Undergo leadership training before choosing from a wide range of specialisms, including; platoon commander, helicopter pilot, intelligence, logistics… even work in military medicine and healthcare.

How do you get there?

You’ll typically need 5 GCSEs at grade 9 to 4 (A* to C) or above and 2 A levels. You’ll have to take aptitude and ability tests, pass a fitness test and interview before a more rigorous assessment to see if you’re capable mentally and physically.
Pay £27,273 to £42,009.

Helping young people into work

A total of £60 million will be invested in a Youth Guarantee to give all young people access to work, training or education, Economy Secretary Fiona Hyslop has confirmed.

An implementation plan for Scotland’s Youth Guarantee is currently being developed. Funding will come from the additional £100 million Scottish Government investment for employment and skills announced last month.

Speaking to Parliament, Ms Hyslop set out more detail about what the Youth Guarantee will aim to achieve.

She said: “The young people who will make up our future workforce are among those who have been hardest hit by this pandemic. We must support our young people and I want to send a clear message to them today.

“I can announce that the Scottish Government will be committing £60m of the £100m employability fund to support Scotland’s Youth Guarantee, targeted at those most in need of support. This will support young people in a range of ways to help make the transition into work.

“I will bring forward more detail on how we will use this investment with the implementation plan, but I can say now that it will be targeted at those most in need of support, to help them make the transition into work.

“To succeed, we must invest quickly to support a range of interventions to keep young people in work in the next few weeks, to encourage employers to recruit more young people, and to ensure we have enough provision in colleges and elsewhere in the system to prepare young people for future opportunities.

“We must work collaboratively across the private sector, third sector and public sector to ensure no one is left behind, and give them every opportunity in life.

“We want employers to have a clear leadership role. I will encourage employers in all sectors to come forward and support what I see as a crucial intervention to prevent coronavirus (COVID-19) leaving a lasting impact on the employment opportunities of our young people, but also to recognise and promote the valuable and positive role that young people have to play in our economy.”

The Youth Guarantee was one of the main recommendations of the Advisory Group on Economic Recovery.

The implementation plan is currently being developed by Sandy Begbie, who chaired the Developing the Young Workforce Group in Edinburgh, East Lothian and Midlothian and helped design the Edinburgh Guarantee for young people.

A total of £100 million for employment support and training was announced last month to tackle employment challenges. £10 million of this will be used to support a range of measures to recruit and retain apprentices.

Last week the Flexible Workforce Development Fund was doubled to £20 million, to allow employers to upskill and reskill workers for new markets. A further £1.5 million was announced for Business Gateway’s Digital Boost programme to help SMEs adapt to new online digital market challenges – almost trebling the capacity of the initiative for the remainder of this financial year.

Free employment support with Next Step

The Office for National Statistics yesterday announced that employment in the UK fell by the largest amount in over a decade between April and June. 

The ONS stated that employment decreased in the UK by 220,000 on the quarter and this has been no more acutely felt than in Edinburgh, which has been one of the hardest hit cities in Western Europe.

At the start of lockdown, The City of Edinburgh Council asked employment service Next Step Edinburgh to respond and they are currently supporting hundreds of people who have lost work. Next Step Edinburgh has been providing employment support for people in and out of work since April 2019, but since March they have adapted their service as registrations from people affected by COVID 19 job losses has increased.  

Paul Forsyth is a self-employed taxi driver who was badly hit by the effects of lockdown:  “As I was a self-employed taxi driver, lockdown affected me really badly. 

“All of the work dried up and I was forced to turn to the government schemes for the self-employed, only to find out I was ineligible and one of many who have been excluded by the UK Government’s measures. 

“I was left with no income and was unable to work. Luckily Next Step Edinburgh provided me with vital support during this time and helped me apply for an Edinburgh Trust Grant, this gave me some breathing space. 

“Now lockdown has eased I am back driving but my adviser Ross has kept in touch throughout. I’m so glad this support was available.” 

Capital City Partnership has been working with key organisations to coordinate a response to the crisis. Their Deputy Chief Executive, Kate Kelman said: “We know that people and businesses are finding it really hard just now and the impact on jobs and the economy is likely to be far-reaching.

“Along with our Joined up for Jobs network of provision, Next Steps has literally ‘stepped up’ to support individuals who are facing redundancy and job insecurity. Their high-quality help and guidance will ensure that Edinburgh residents can progress quickly into fair, sustainable work.” 

Lesley Morrison who is a Service Manager for Community Renewal, the charity who deliver the Next Step Edinburgh service, explained: “We don’t believe in a one size fits all approach – everyone is different, and we listen to what each client’s needs and together we come up with a plan.

“Some people just need a job right away and we can link them with employers we have relationships with. For everyone else, we work with them, so they are ready for when the job market recovers; whether that be refreshing a stale CV, helping with applications or directing them to vocational training if they are considering a career change.

“Whatever is needed, we are here – and if we can’t support all their needs, we will link with specialist organisations who can help them whilst we continue to support their employment needs.”

The City of Edinburgh Council continues to fund Next Step Edinburgh to support people to secure and progress into employment. Additional funding was made available through City Region Deal has also allowed the development of a jobs website –  www.c19jobs.org – which directly assists those who have faced redundancy or job insecurity due to the current crisis. 

Councillor Cammy Day, Depute Leader of the City of Edinburgh Council, said:  “As the economic impact of the pandemic on Edinburgh unfolds, we’re doing all that we can to help people facing financial hardship. We know that this crisis is far from over and we stand ready to help our most at-risk residents.

“The Next Step Edinburgh employment programme is in place to support anybody facing redundancy or job insecurity in Edinburgh. I’m pleased we’re able to fund this service in order to support people back into careers as quickly as possible. 

“The project is part of a package of measures we’re working on right now to prevent long-term unemployment in the coming months and years, including an expanded Edinburgh Guarantee. Hailed by the Scottish Government as a really good example of the type of work cities can do to successfully tackle unemployment, our Edinburgh Guarantee has been supporting disadvantaged young people for years. 

 “We’re looking to expand this offer even more in light of Covid-19. We want to use it to help people of all ages who might face additional barriers to employment and we’re calling on employers to sign up and support us.” 

Lesley warns that the journey ahead won’t be straightforward, but stresses that nobody has to face it alone – there is support available: “Next Step Edinburgh’s advisers will do everything they can to support you. 

“We are working with employers recruiting right now but we understand those jobs may not be right for some. For those people we will collaborate so they will be front of the queue when the job market recovers.” 

Anyone looking for support can find the contact details on Next Step Edinburgh’s website – www.nexstepedinburgh.org  

More funding for apprenticeships

Scotland’s future workforce will be at the heart of rebuilding the economy following the coronavirus (COVID-19) pandemic, Economy Secretary Fiona Hyslop said.

Announcing £10 million for a range of measures to recruit and retain apprentices, including additional funding for the Scottish Government’s Adopt an Apprentice programme, Ms Hyslop said the funding would help modern and graduate apprentices who are facing redundancy as a result of COVID-19 get back into work.

Ms Hyslop (above) said: “The young people who will make up our future workforce are among those who have been hardest hit by this pandemic. As such, it is crucial that we support them and ensure they are at the heart of our economic recovery from COVID-19.

“This targeted funding will extend the reach of our support for apprentices, including our Adopt an Apprentice programme. Combined with our commitment of at least £50 million for youth employment and the Youth Guarantee, we will ensure no one is left behind.

“Apprenticeships are not only valuable for our young people, they are a key way for all employers to invest in their workforce, and provide the skills the economy needs both now and in the future.

“Our focus is on protecting jobs, creating jobs, ensuring quality jobs and supporting skilled jobs. By taking this action to protect and support skilled jobs now, we will rebuild a stronger, fairer and greener future for Scotland.”

Frank Mitchell, Chair of Skills Development Scotland, said: “This welcome announcement underlines the importance of apprentices to the Scottish economy and the crucial role they will play in supporting individuals and businesses in the recovery from COVID-19. 

“We will continue to liaise with the Scottish Apprenticeship Advisory Board and other employer organisations on the development and delivery of employer incentives and subsidies. SDS is also fully engaged with the work Sandy Begbie is leading on the development of a jobs guarantee for young people in order to maximise the use of all available incentives towards the retention and recruitment of apprentices.”  

Further immediate investment to support economic recovery from COVID-19 was set out last week by the Scottish Government, with additional funding for workforce training and digital technology announced.

The Flexible Workforce Development Fund, which helps employers upskill and reskill their existing workforce through college courses, will be increased from £10 million to £20 million.

Meanwhile a further £1.5 million will be invested into the Digital Boost programme – almost trebling the capacity of the initiative for the remainder of this financial year.

More than half of furloughed staff are back at work, says Resolution Foundation

Think tank Resolution Foundation economist Daniel Tomlinson says the UK Government is NOT paying nine million people’s wages. He says the number of workers currently furloughed is half this amount …

From today, employers will start contributing towards the wage costs of furloughed employees (writes RESULTION FOUNDATION’s DANIEL TOMLINSON).

This significant first step in the phasing-out of the Coronavirus Job Retention Scheme (JRS) carries real risks of increased redundancies – particularly for those in the hardest-hit sectors – and so attention should also focus on the important question of just how many people are furloughed today.

Despite significant easing of the lockdown and attention rightly focused on the large number of redundancies announced of late, it’s still common to hear the claim that nine million employees are being paid right now through the scheme. However, this is simply not true. Although it is true to say that in total nine million people have been furloughed for at least one three-week period since March, this cumulative figure does not reflect what’s happening right now. Rather, all the evidence suggests that the number of people furloughed today – as employer contributions towards furlough pay kick in – is likely to be at most half, and maybe even as low as one-third, of this nine million total.

For the millions of workers who have returned to active employment over the past three months, the JRS has served its purpose well. But it may be the case that more than one million employees in the hardest-hit hospitality and leisure industries are still furloughed.

It’s in this context that the impact of the across-the-board increases to employer contributions in August, September and October are a concern. Delaying future increases in JRS contributions for the hardest-hit sectors would help reduce the rise in unemployment forecast in the autumn.

There are not nine million people on the Coronavirus Job Retention Scheme today

The Coronavirus Job Retention Scheme (JRS) has been a very successful and well-implemented policy intervention. It has supported household incomes in the face of an unprecedented shock, and maintained the crucial attachment between employees and their employer.

However, for many firms and employees it will have only ever been used on a temporary basis at the height of the economic shutdown. Many furloughed employees have since returned to work (some on ‘flexible furlough’ for part of their working hours), and a smaller group will have been made redundant already, even before today’s introduction of employer contributions.

But you wouldn’t know this from listening to our politicians and broadcasters. The Prime Minister, claimed on 24 July 2020 that his Government was “supporting the livelihoods of 9 million people now through furlough”. Similarly, the BBC reported on 28 July 2020 that “9.5 million people are using the scheme, the same as a week ago”.

This is wrong. Although the cumulative take-up of the scheme since its launch is in excess of nine million, the actual number of people using the scheme right now – on the day that employers are now required to start contributing to the payroll costs of furloughed employees – is undoubtedly much lower.

Figure 1 shows the increase in cumulative JRS take-up over time, as published by HM Revenue and Customs. These cumulative figures are now entirely meaningless when it comes to understanding the path of the economic recovery or the numbers of people who have been furloughed for a prolonged period of time.

Figure 1: Nine million people have been on the JRS at some point since its launch

All the evidence suggests that the number of people currently furloughed is at most half the nine million total, and could even be one-third of this level

In the absence of official statistics on furlough numbers over time, we can turn to other estimates of furloughing and coronavirus labour market effects from various Office for National Statistics (ONS) surveys, in order to get a sense of when take-up peaked and just how fast it has fallen.

Across the three available data sets stretching back to the announcement of lockdown on 23 March 2020, the consistent finding is that the number of people furloughed or away from work is likely to have peaked in late April at somewhere between seven and eight million employees (Figure 2). The upper end of this range is based on the ONS’s Business Impacts of Coronavirus Survey (BICS), which reported that 31 per cent of the private-sector workforce was furloughed in late April.

Figure 2: The number of people now furloughed is much lower than in late April

Since late April, the number of people furloughed or away from work looks to have fallen considerably. This is unsurprising given restrictions on non-essential retail were lifted on 15 June, and on many parts of hospitality and leisure on 4 July (in England).

The opening up of these parts of the economy, and the general increase in economic activity since the depths of lockdown, will have led to millions of employees returning to work.

For example, the number of people temporarily away from work above and beyond the usual level of temporary work absences (the red line in Figure 2)  fell by 40 per cent between late April and late May. This will have been driven primarily by people coming off furlough, but also by reductions in the number of people away from work for other reasons such as shielding, self-isolating or for childcare.

Some of this decline will also be driven by moves off the JRS and into unemployment, although this is likely to be a relatively small part of the story to date as in May, June and July employers had not yet been asked to contribute anything towards the costs of furloughing their employees.

More up-to-date estimates come from the BICS for early July, which suggests that 16 per cent of the private-sector workforce was furloughed at this time. We estimate this equates to around five million people still on furlough at the start of the month.

At the other end of the range, the Opinions and Lifestyle Survey (OLS) shows that the proportion of those who report that they are employed but furloughed fell from 13 per cent of all workers in the period 18-21 June, to 8 per cent of all workers in the period 8-12 July.

This figure, which equates to three million employees, is at the lower end of the range we’d expect, and will have been affected by the introduction of flexible furloughing from 1 July. Many employees who returned to work part-time in July will not have been counted as furloughed in these OLS estimates, but may well have still have the majority of their pay provided through the JRS (and will appear in some of the other series shown in Figure 2).

It would be unwise to lean too heavily on this or any other estimate from one particular survey in drawing conclusions as to the number of people furloughed today. The use of flexible furlough in July could mean that the pace of decline in take-up slowed last month as employees moved from full to flexible furlough, rather than off the scheme altogether. To date there is little evidence on the impact of flexible furlough on business behaviour, but it’s likely that usage of this component of the scheme will be high.

Overall, it is reasonable to draw the conclusion that the number of people furloughed right now, as employers begin making contributions to furloughed employees’ wage costs, is certainly below 4.5 million (half of the commonly cited nine million total) – and may be as low as one-third of this level.

Employer contributions will disproportionately affect workers in hospitality and leisure, so a sectorally differentiated wind-down of the scheme is desirable

Although the number of people furloughed right now is lower than many claim, it is still a large proportion of the workforce – particularly in some sectors. For this reason, the impact of the introduction of employer contributions towards furloughed employees’ wage costs from 1 August should not be taken lightly.

This big change to the scheme will mean that employers will now start paying employer National Insurance contributions and minimum auto-enrolment pension costs for furloughed employees, at an average of £70 a month (equivalent to 5 per cent of the average employee’s wages pre-coronavirus).

This shift will be followed by increases in contributions in September and October and then the ending of the scheme in November, changes which will have large effects on employer costs in sectors where furloughing rates are higher, such as hospitality and retail. We estimate that in these two sectors as many as one million employees (38 per cent) may still have been furloughed in late July (Figure 3).

Figure 3: Four-in-ten hospitality and leisure workers could still be furloughed

The fact that furloughing rates, and therefore the cost of employer contributions, are concentrated in particularly hard-hit sectors strengthens the case for treating these parts of the economy differently from the rest in the months ahead. Employees in these sectors are now at heightened risk of entering unemployment this autumn as employer contributions are introduced today and then increased throughout September and October.

We have previously called for the phasing in of employer contributions to take place on a slower timetable in the hardest-hit sectors for just this reason. The Government could still take this approach with the planned September and October employer contribution increases (to an estimated 15 and 25 per cent of pre-coronavirus wage costs), in order to limit redundancies in sectors like hospitality and leisure.

Further, the imposition of local lockdowns and the very real risk of a broader second wave means that Government must also be clear about what policy will do in these circumstances. In time, flipping the JRS so it subsidises work being done in these hardest-hit sectors, rather than provides payments when work isn’t done, would be more effective way of maximising the amount of work carried out and would be a more sustainable way of providing support to parts of the economy heavily affected by ongoing social distancing.

To date, the JRS has been a clear policy success. However, the challenges of phasing it out, calibrating it to the path of the virus and the return of economic activity mean that the hard work of designing and implementing policy that protects jobs and incomes in this crisis is far from over.

Pledge to protect workers

FAIR WORKS PRACTICES HIGHLIGHT NEED FOR COLLABORATION

Business groups, trades unions and leaders from local government and the third sector have committed to putting fair work at the heart of Scotland’s economic recovery.

As Scotland continues to ease lockdown restrictions, organisations including the Institute of Directors (IoD), SCDI, STUC, COSLA and SCVO have signed a statement underlining the collaborative approach needed between employers, unions and workers to ensure workplaces can operate safely.

Fair Work Minister Jamie Hepburn said: “There is no doubt that Scotland’s economy faces an enormous challenge as we emerge from the coronavirus (COVID-19) crisis. However, I firmly believe that with employers across all sectors of the economy working in partnership with unions and workers we can use the crisis as an opportunity build fairer and more inclusive workplaces.

“In March we published a statement of Fair Work Principles, setting out our high expectation for keeping fair work at the heart of our national response to COVID-19 during lockdown. Now, as these restrictions continue to ease, we must maintain the momentum we have started to build, ensuring collaboration between workers, employers, representative groups and trades unions.

“This new statement will help employers and employees make decisions that are in everyone’s interest as we carefully reopen the economy. I have been deeply impressed by the work already done in this area, and I want to offer my sincere gratitude to workers and employers for reacting with such agility and dynamism to the challenges thrown up by the pandemic.”

Malcolm Cannon, IoD National Director, Scotland, said: “It is absolutely critical for the recovery of the Scottish economy that the Government works closely with Business Organisations, and the IOD is happy to support this fair work initiative.”

The revised Fair Work Statement was signed by the Institute of Directors, Scottish Council for Development and Industry, COSLA, SCVO, the STUC and Scottish Government.

Last week, the Unite trade union criticised Centrica’s employment plans.

The plan by Centrica, owner of British Gas, ‘to fire and rehire’ its 20,000 employees is the latest example of organisations using the coronavirus emergency as a smokescreen to shed jobs, and erode pay and conditions of workers.

Unite, Britain and Ireland’s largest union, said the decision of the energy giant follows on from other high profile employers, such as British Airways and the University of Sheffield, which have also adopted similar ‘deplorable’ employment practices during the pandemic.

Unite represents Centrica workers including electrical services’ engineers, as well as those employed at power stations and at Centrica Storage Ltd.

Unite regional officer Mark Pettifer said: “The notice that Centrica has given the trade unions that it is going to ‘fire and rehire’ its 20,000 staff on what, we believe, will be inferior pay and employment conditions is deplorable.

“It is part of a disturbing trend where employers are using the pandemic to shed staff and erode employment conditions.

“Centrica is adopting the same tactics as BA and is using Covid-19 as a smokescreen to cut jobs of loyal and dedicated staff who have worked through the lockdown providing energy to the nation.

“Centrica has been in consultations with the unions for the last fortnight over its future plans and now in an act of bad faith unveils its ‘fire and rehire’ plans. It smacks of blackmail – ‘If you don’t do what we want, we will issue notice of dismissals’.

“Unite urges the Centrica management to have an urgent rethink and engage constructively with the trade unions to tackle the specific issues facing Centrica and, more generally, the UK energy sector post-Covid-19.”

In June, Centrica announced that it would be axing of 5,000 jobs, primarily at management level. Before lockdown the company faced a situation of customers leaving to go to smaller suppliers, the energy price cap and falling gas prices.

More information about Fair Work can be found on the Fair Work Convention website.

£100 million boost for employment support

Focussing on support for youth jobs

People looking for work or those at risk of redundancy will benefit from additional assistance to move into work or retrain.

The package of support, outlined by Economy Secretary Fiona Hyslop yesterday, is backed by £100 million for 2020/21, with at least £50 million of that funding set aside to help young people get into work.

The measures include a job guarantee for young people, a new national retraining scheme, and more funding to provide immediate assistance and advice if people are made redundant.

In addition, Fair Start Scotland, our employment support service, has been extended by a further two years to March 2023.

Ms Hyslop said: “We are potentially facing unemployment on a scale not seen for decades as a result of coronavirus (COVID-19). Today’s announcements show that we are ready to rise to this challenge with investment to help ensure that people who have lost jobs, those at risk of unemployment and young people entering the labour market can benefit from more and better job opportunities.

“This crisis is having a significant impact on our young people and we need to act quickly to protect their future. I have asked Sandy Begbie, who led the Developing the Young Workforce Group that played a pivotal role in the delivery of the Edinburgh Guarantee to young people, to develop an implementation plan for a job guarantee for young people, as recommended by the Advisory Group on Economic Recovery, and we will set out more detail on that plan in early August.  

“The extension to Fair Start Scotland will also provide stability and continuity to the most vulnerable and those furthest from the labour market, including people with disabilities, health conditions and those who are long-term unemployed, to help them progress into work.”

The £100 million is in addition to the £33 million already committed for employability support for 2020/21.

Bleak outlook as a third of firms set to cut jobs over coming months

Results from the British Chamber of Commerce’s Quarterly Recruitment Outlook, in partnership with Totaljobs, reveal the impact Coronavirus has had on the jobs market, with the two organisations calling for further action from government to protect businesses and jobs.

  • 29% of businesses expect to decrease the size of their workforce in the next three months
  • 28% decreased size of workforce in Q2 but 66% kept their workforce constant, reinforcing the success of the Job Retention Scheme
  • The two organisations call for a cut in employer National Insurance Contributions to protect businesses and jobs.

The leading business organisation’s landmark survey, which serves as a barometer of the UK labour market, received 7,400 responses and is the largest of its kind in the UK.

Fieldwork was done prior to the Chancellor’s Summer Statement which announced the Job Retention Bonus, Kickstart Scheme and an Apprenticeship Recovery programme, among other things.

Redundancies expected

29% of businesses expect to decrease the size of their workforce in the next three months before the government’s Job Retention Scheme ends, the highest on record.59% will keep headcount the same and just 12% will look to increase the size of their workforce.

The news comes as businesses across the UK economy announced significant redundancies. The survey found that over the next three months:

  • 18% of micro firms (with fewer than 10 employees) expect their workforce to decrease.
  • 41% of small and medium firms (with 10 to 249 employees) expect their workforce to decrease.
  • 41% of large firms (with over 250 employees) expect their workforce to decrease.

The survey reinforced data from the BCC’s Quarterly Economic Survey of the challenging environment business communities across the UK are facing, with record falls in key indicators of business activity, including domestic and export sales, cashflow and investment.

Recruitment

The percentage of businesses attempting to recruit in the previous quarter fell to 25%, the lowest level on record. Of the firms that attempted to recruit, 65% faced recruitment difficulties, particularly for skilled manual/technical or managerial roles.

Success of the Job Retention Scheme

While 28% of respondents decreased their workforce in Q2, two in three firms kept staffing levels constant. This reflects data on the success of the Job Retention Scheme, with the BCC’s Business Impacts Tracker indicating that around 70%of businesses had furloughed a portion of their staff.

Beginnings of recovery?

As lockdown lifts, Totaljobs have seen a 30% month-on-month increase in the number of jobs being advertised on their website for June, with the largest volume posted in IT (20k), logistics (12k) and social care (9k).

There were also month on month increases in sectors benefiting from lockdown easing like retail (+51%), travel (+47%) and hospitality (+23%). Skilled trades also started to see growth compared with previous weeks, with jobs advertised increasing by57%.

Unsurprisingly, applications per vacancy were up across all sectors, reflecting continued rises in candidate activity on the Totaljobs site.

Further action needed

The two organisations have called on the government for further action to limit the damage to the UK labour market, including reducing the overall cost of employment, through a temporary cut in employer National Insurance Contributions and support to upskill and reskill employees as businesses adapt to change.

BCC Co-Executive Director Hannah Essex said: “Our research demonstrates the Chancellor’s focus on protecting, supporting and creating jobs is exactly what’s needed to drive the UK’s economic recovery in the coming months.

“Many businesses are suffering from an historic cash crunch and reduced demand, meaning firms will still face tough decisions despite welcome interventions made in the Summer Statement.

“The government should consider additional support for employers before the Autumn Budget to reduce the overall cost of employment and prevent substantial redundancies.Measures could include a temporary cut in employer National Insurance Contributions and support to upskill and reskill employees as businesses adapt to change.”

Totaljobs CEO Jon Wilson said: “The latest figures from the Quarterly Recruitment Outlook make stark reading, especially when compared to what we had grown accustomed to in previous years. It is clear that business confidence is low, with many being forced to make difficult decisions when it comes to their workforce.

“However, the Chancellor’s summer statement outlined a number of measures that will not only support jobs but help create new roles in the economy and give confidence to businesses trying to plan for the future. The interim cuts in stamp duty and VAT should give the hard-hit housing and hospitality sectors a much-needed boost.

“It’s clear that moving forward, adaptability remains paramount for businesses and people, with upskilling, reskilling and utilising transferable skills all key factors during this recovery period. 

“To protect jobs and further ease the burden facing businesses, we join the British Chambers of Commerce in their call for a cut in employer National Insurance. We also urge the Chancellor to continue to consider the needs of the sectors and demographics most impacted by Covid-19, to protect people’s livelihoods and help the jobs market and wider economy pick up.”

Commenting on the latest employment figures published today (Thursday), which show around 650,000 fewer paid employees since before the pandemic, TUC General Secretary Frances O’Grady said:  “There’s a national disaster unfolding, with vacancies at an all-time low and more jobs lost every day, but ministers are watching from the side-lines, instead of saving jobs with targeted support for the hardest-hit sectors like retail, manufacturing and aviation. 

“The more people we have in work, the faster we will work our way out of recession. If the government doesn’t go all out to protect and create jobs, the economic crisis will be longer and harder. 

“We can create jobs by fast-tracking infrastructure projects. This would speed up the delivery of faster broadband, more childcare, green technology, modern transport and housing. And it would create over a million jobs across the UK.” 

You can view the full QRO report at the link below:

BCC QRO Q2 2020