HR relieved as furlough extended to September 2021
The UK government has announced that the furlough scheme will be extended another five months until the end of September 2021.
Now set to taper off in the summer as the economy starts to open up, employers will be expected to pay more of employees’ wages from July - starting at 10% and rising to 20% in August and September.
The news follows figures that showed the number of people on the scheme had risen by 700,000 in January this year, despite the scheme’s prior scheduled end on 30 April 2021.
For many in HR the extension is a relief as it means that more jobs may be able to be saved.
Eugenio Pirri, chief people & culture officer at Dorchester Collection, said that the announcement was what the hospitality sector was hoping for.
Speaking to HR magazine, he said: “To say we were all waiting with great anticipation was an understatement, but at the same time, not having this good news today would have made no sense whatsoever.”
The CIPD similarly has welcomed the move, saying that it will buy crucial time for vaccines to be rolled out.
CIPD head of public policy Ben Willmott said: "This action will save thousands of viable jobs, which otherwise would have been lost if the scheme had finished at the end of April and could help ensure that unemployment undershoots the official forecasts.”
The self-employed income support scheme (SEISS) has also been extended, giving those who became self-employed during 2019-2020 access to cash grants.
Kate Smith, head of pensions at Aegon, added that the extension is also great news for pensions as it means that those on furlough will be able to continue receiving employer contributions to their retirement pot if they don’t opt out.
Smith said: “The job retention scheme has meant that workplace savings have been remarkably resilient. The true impact will only be known once the support thaws and melts away altogether.”
Despite the announcement allowing employers more time than the last extension, Pirri added that an even earlier decision would have been more welcome.
“While this news should have been shared earlier; nevertheless, it will make a difference to everyone, not only financially but on people’s mental health and wellbeing,” he said.
“Unemployment remains high and other schemes that bring people back into employment will all assist in getting us back on track.”
The Trade Union Congress (TUC) agreed, renewing the call for furlough to be extended until the end of 2021.
TUC general secretary Frances O’Grady said the chancellor should amend the extension to mean the scheme will stay in place “as long as needed to secure the recovery.”
“Reducing support to employers in July, just as restrictions end, will risk jobs,” she said. “The job retention scheme should be available until at least the end of the year. And without specific support, the hardest-hit sectors – like hospitality, retail, the creative industries, travel and aviation - will struggle to reopen fully.”
She added that protecting jobs is only half the battle and urged the chancellor to deliver a programme of job creation in today’s budget.
One of the moves the TUC recommends is the promotion of training for people on furlough.
O’Grady also said government should ensure that all furloughed workers are paid at least the national minimum wage following its findings that the UK's lowest paid workers are the ones most likely to have lost their income in the pandemic.
According to the Annual Survey of Hours and Earnings (ASHE), published in November 2020, two million employees were paid below the minimum wage in April 2020 up from 409,000 in April 2019. The TUC believe the rise may have been in part caused by pay cuts on the furlough scheme.
Further support for the economy and jobs will be announced in the chancellors 2021 Spring Budget today which will take place after Prime Minister’s Questions at 12:30.
HR is already expecting further apprenticeship reform and breaks in corporation tax from the announcement.