Covid: Furlough cut 'could push businesses off cliff edge'

The travel industry is one sector which still has high numbers of staff on furlough, figures show

Making businesses pay more to furloughed staff could push firms "off a cliff edge" as they are trying to recover from Covid, unions have warned.

Almost 70,000 people in Wales were on furlough at the end of June, according to latest figures.

Unions have warned changes from Sunday, doubling the amount firms pay, put jobs at risk and call for it to be delayed.

The UK government said the furlough scheme was in place until September to provide "certainty over the summer".

At the height of the pandemic last year, 378,400 people in Wales were furloughed.

But as lockdown restrictions eased, numbers on the government's coronavirus job retention scheme have fallen - with an estimated 68,800 furloughed at the end of June, according to UK government figures.

• What impact has the furlough scheme had?

• How many people are now on furlough?

• Fewest people on furlough since pandemic began

Staff returned to work in most sectors as the country reopened but some employed in the travel and hospitality industries remain on flexi-furlough - and work is based on demand.

What is furlough and why is it changing?

Numbers furloughed in the hospitality industry have fallen since bars and pubs reopened

Furlough was introduced in spring 2020 to stop people being laid off by their employers during lockdown.

The government initially paid 80% of the wages of people who could not work, or whose employers could no longer afford to pay them, up to a monthly limit of £2,500.

But the scheme is being wound down, and since 1 July, employers have been asked to contribute 10% towards the wages of furloughed workers - with the government's contribution falling to 70%.

That amount is now set to rise to 20%. The monthly limit of £2,500 will stay in place, so workers will not notice the difference.

However, by making furlough more expensive for employers, the UK government hopes to encourage them to take workers back full-time if they can. The scheme is set to continue until 30 September.

Ahead of the changes, unions warned the increased financial burden on firms could hit industries just as they were trying to recover from repeated lockdowns.

With coronavirus measures still in place restricting numbers allowed in bars and restaurants, nightclubs unable to open and many not going abroad on holiday due to Covid rules, unions fear the travel and hospitality sectors could be badly affected.

The Wales TUC said some firms were still having to furlough staff due to not being able to open fully, and "half of all staff in travel agencies are still on furlough".

"We do feel that doubling the employer contribution is too much too soon, and puts jobs at risk in some parts of the economy," a spokesperson said.

The union representing travel and transport industries, the TSSA, said many people were still wary of booking holidays abroad and companies were struggling to survive.

"Any cuts to the furlough scheme will be like kicking people when they're already down," General Secretary Manuel Cortes said.

"With no structured plan to provide the extra support, we are likely to see more travel agencies go under."

'We can't recruit staff'

After months of being ground to a halt due to travel restrictions in the pandemic, drivers are back on the roads taking people on trips across the UK.

"We were faced with the really difficult decision of laying everyone off if it wasn't for furlough. It was a godsend," said Jason Edwards, director of Llantrisant-based Edwards Coaches.

More than 500 staff at Edwards Coaches were furloughed when the pandemic struck

He said while it was good more than 500 staff who were on furlough were now back at work, the company was struggling with staff needing to take holidays, and being unable to recruit to deal with demand.

"You'd pinch yourself after the 14 to 15 months we've had, but we are short of staff," he said.

"There's a huge appetite for travel, but I feel there's a reluctance now to change jobs because people are nervous they might lose their furlough protection."

• What's it like to be on furlough for a year?

• 'I fell through the gap with the furlough scheme'

• Why are hospitality workers leaving the industry?

Mr Edwards said changes to furlough should be industry-specific as the scheme comes to an end.

'Extremely concerning'

In Denbighshire, drivers have been excited to welcome back customers at Voel Coaches, but manager Chris Gentle said he was "extremely concerned" furlough was being wound down just before winter.

While 50 staff who had been furloughed are now back in work, they are on flexi-furlough, allowing the company to send them home if they hit a quiet period.

"We are receiving a high number of bookings, and starting to operate back to full capacity on some trips, but there's still that knock-on effect of a whole 16 months of being closed, with overheads and maintenance still being paid," he said.

The tourism and hospitality sectors are among the main users of furlough now

"We are trying to recover from that, and also now paying more of the staff wages when they go into furlough, and team that with the winter, it's really unsettling."

The Welsh government said it had repeatedly called on the UK government not to withdraw the furlough scheme until the economy "is ready".

The UK government said the scheme had protected over 11.6 million jobs and eligible tourism businesses would also continue to benefit from reduced VAT until March 2022.

"We deliberately went long with our support to provide certainty to people and businesses over the summer," a spokesperson said.

"Businesses can also continue to access other support including our Recovery Loan scheme - and we recently made cautious changes to the requirements for international travel which will support activity within the industry."