By Sam Ord
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One in 16 firms could close when furlough pay ends

This article is over 2 years, 6 months old
Issue 2768
Chancellor Rishi Sunak wont be extending support
Chancellor Rishi Sunak won’t be extending support (Pic: Flickr/ HM Treasury )

One million workers are employed by businesses at critical risk of closing operations within the next three months.

This will happen as the government is set to ­withdraw Covid-19 support schemes such as furlough from the end of September.

One in 16 companies now say that they are in danger of closure in the next three months.

Concerns are also being raised that as furlough ends workers will have no choice but to claim Universal Credit just as it’s cut by £20 a week.

The reduction of Universal Credit will push many into peril.

It will result in 683,000 households no longer having enough to afford essentials such as food and rent.


And 824,000 children who benefit from Universal Credit will also suffer as a result.

The study, conducted by the London School of Economics Programme on Innovation and Diffusion (POID) ­outlines that many firms are in a much better position than in January this year.

But the risk to workers hasn’t gone away.

Deven Ghelani, chief ­executive of the analysts Policy in Practice said, “By removing the pandemic’s ­protective measures too early, the government is introducing an autumn of income shocks to families who depend on this support.”

The study shows how the uncertainty of the economy and the Covid-19 impact hits some industries and their workers harder than others.

Travel, food and ­entertainment workers still rely heavily on the use of the furlough scheme.

At the end of June, 1.9 ­million workers were using the furlough scheme, despite the changes implemented in August. Now employers are made to pay 20 percent of wages and the state will pay 60 percent.

At its peak in January this year, 5.1 million workers relied on furlough.

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POID Researcher Peter Lambert said, “I think there will probably need to be some continuation of support in specific sectors.

“My bet is there’ll be more targeted support, because unless the economy really, really picks up, there’s going to be lots of people still left in the lurch in specific sectors.”

The TUC union grouping has called on the ­government to create a permanent ­short-time working scheme as “a post pandemic legacy”.

It hopes this will protect workers through periods of future economic turmoil.

The TUC says the ­furlough scheme, while not ­perfect, is a major success, protecting millions of jobs and ­livelihoods.

The federation encourages the government to build on furlough, “not throw away its good work”.

TUC general ­secretary Frances O’Grady said, “Setting up a ‘daughter of ­furlough’ to provide certainty to ­workers and firms through future industrial change would be a fitting pandemic legacy.”

A furlough scheme should be available to all ­workers who are laid off, and it should cover 100 percent of wages.

Bosses stressing out homeworkers

Working from home during the Covid-19 pandemic has caused a huge rise in unpaid overtime, according to a report from the Autonomy think tank.

Bosses exploiting the pandemic for unpaid labour particularly impacts women.

Women are 43 percent more likely to work hours beyond their contracted amount.

Unpaid labour during home working is a huge factor in negative physical health and mental distress.

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Women, especially those with children, face subsequent mental distress at a much higher level than their colleagues.

Autonomy believes “right to disconnect” laws must be implemented.

This would mean workers taking measures such as work calls or emails not being answered during rest breaks.

The report suggests employers should “not require a worker employed by him to monitor or respond to any work-related communications, or to carry out any work, outside the worker’s agreed working hours”.

Will Stronge, the director of research at Autonomy, said there is a “need to create much clearer boundaries between work-life and home-life”

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