Postal workers union CWU has responded defiantly to an announcement by Royal Mail’s parent company International Distribution Services PLC’s that they plan to slash up to SIX THOUSAND jobs due to mounting losses.
The union says Royal Mail’s announcement is nothing more than ‘their latest misjudged scare tactic to threaten members into submission’.
CWU said: ‘We (CWU) will meet Royal Mail Group today because we continue to act in good faith. We will also bring you a fuller update from the unions leadership later as well.’
CWU General Secretary Dave Ward said: “The announcement is the result of gross mismanagement and a failed business agenda of ending daily deliveries, a wholesale levelling-down of the terms, pay and conditions of postal workers, and turning Royal Mail into a gig economy style parcel courier.
“What the company should be doing is abandoning its asset-stripping strategy and building the future based on utilising the competitive edge it already has in its deliveries to 32 million addresses across the country.
“The CWU is calling for an urgent meeting with the Board and will put forward an alternative business plan at that meeting.
“This announcement is holding postal workers to ransom for taking legal industrial action against a business approach that is not in the interests of workers, customers or the future of Royal Mail. This is no way to build a company.”
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.
A consolidation plan to ensure that Edinburgh Airport remains open and operational during the coronavirus outbreak has been put into action. The news comes as the airport management enter talks with staff with a view to shedding at least 100 jobs.
Enforced travel bans across the world have resulted in airlines dramatically reducing their schedules to and from Scotland, directly impacting on passenger numbers at the airport.
There was a small drop in passengers in February with 935,455 passengers passing through the airport, which was 0.4% behind February 2019. However, the airport is predicting a period of zero or close to zero passenger demand.
To protect as many jobs possible and ensure the airport is open throughout, the airport will implement a ‘consolidation’ programme which will also form part of a recovery plan to ensure the airport is ready to return to full operations at the end of the outbreak. This plan includes:
Terminal consolidation with certain areas closed and the centralisation of operations
Deferring expenditure on some capital projects
Powering down high consuming energy items like elements of the baggage system and heating and cooling systems on parts of the airport that are closed
A number of retailers and food and beverage outlets suspending operations
Gordon Dewar, Chief Executive of Edinburgh Airport said: “This is an unprecedented time not only for the aviation industry but for everyone as we all do what we can to ensure the health of ourselves and of those around us.
“For us, that includes the health of our airport. Our plan is based on keeping the airport open throughout and being there for those people who are still travelling and those staff members who are making that travel possible.
“We’re in a situation which is ever changing and as more countries enforce travel bans or special measures then it stands to reason that airlines will feel that impact and airports then feel that pain too.
“Unfortunately, that is happening now and we are trying to mitigate as best as we can and steer the airport through this situation in preparation for what comes next – and that is the biggest unknown in all of this.
“The airport is a facilitator of many things, that is our main role. Yes, we transport people around the world but it’s what those people bring that is the true value – they are our inward and outward tourists, they are our business leaders, they are our students and lecturers, they are our scientists and researchers. All of these things are important in the wider Scottish economy and we are doing what we can to ensure we are ready to return towards normal when the time comes.”
The airport has welcomed announcements by the UK and Scottish Governments on financial support for the sector through this situation.
Gordon Dewar added: “We welcome the collaboration there has been with both governments at this critical time but we will need continued support to ensure that the aviation industry is able to play its part in the country’s economic recovery.
“Along with other UK airports, we ask both governments to come together and show unity and support with the industry to help us weather this storm and come out of it still standing and ready to move forward again.”
‘Our mandate from our members remains. Industrial action remains a real possibility in the event of compulsory redundancies.’ – UNISON lead negotiator Tom Connolly
UNISON has postponed its lobby of Edinburgh Council’s Finance and Resources Committee tomorrow following assurances from senior councillors that privatisation plans will be dropped and redundancies delayed for further talks.
Amanda Kerr, Edinburgh UNISON branch secretary, said: “Following concerted UNISON pressure, we welcome this re-think and the dropping of privatisation plans. We also welcome the delay on redundancies, however we still have a long way to go and we will be building for a lobby of the next Finance and Resources Committee on 29 October.
“Our campaign has brought this to the public eye and that campaign will continue. We warned that the level of cuts envisaged would be devastating for services. After years and years of cut after cut, no council can sustain even more massive cuts.”
Lead negotiator Tom Connolly added: “This is an important victory. The damage privatisation would have caused cannot be overestimated. The union will focus on protecting jobs and conditions, engaging with our members and building towards the lobby on 29 October. Our mandate from our members remains. Industrial action remains a real possibility in the event of compulsory redundancies.”
Last week, UNISON warned that up to 3000 jobs could be lost as the council aims to balance it’s books, and councillors are set to consider a number of key proposals to address a £126m budget shortfall over the next four years at tomorrow’s meeting.
Councillor Alasdair Rankin, Finance Convener, said: “We are very clear about the scale of the financial challenge that the Council is facing. The Council is experiencing greater demand for services than ever before, with a growing population in Edinburgh and increasing numbers of older people and younger people, while our overall budget remains the same.
“We need to take action in order to achieve the necessary savings to meet this demand, and we are making every effort to do this in a way that will safeguard frontline services for the people of Edinburgh.
“We want to invest in the services that are important to the public but must also look to rationalise our spending where appropriate. We recognise that some of these proposals may involve tough decisions, including a reduction in Council jobs, particularly in middle management. But while this won’t to be easy, savings will allow us to prioritise the things that matter most to people.
“Our aim, as ever, is to improve and enhance the city for residents, and this package of measures is the next step to achieving this. Councillors will consider these proposals and we are looking forward to the discussions. ”
