Employers planning redundancies at twice the rate of last recession

Employers in Britain are making plans for redundancies at more than double the levels seen in the 2008/9 recession, new figures reveal.

It comes after social distancing measures to prevent the spread of Covid-19 forced workers to stay at home, brought transport to a halt, and closed businesses across the country, including offices, shops, pubs and restaurants.

Under legislation that applies in England, Scotland and Wales, employers must notify the Insolvency Service if they plan to make 20 or more workers redundant in any single “establishment” using a form called HR1.

Based on HR1 data obtained following a Freedom of Information request, the Institute for Employment Studies (IES) estimated that redundancies will reach 450,000 in the third quarter of 2020 — significantly higher than the quarterly peak in the last recession (of just over 300,000) — with a further 200,000 redundancies in the final quarter of the year.

Part of this rise may be explained by increased compliance with HR1 reporting requirements, but the vast majority is a consequence of the Covid-19 pandemic and its economic impacts, IES said.

Labour Force Survey data for January-June 2020 shows that 240,000 people were made redundant in the first half of the year.

To help minimise and respond to the anticipated job losses, IES called for:

– A reduction in labour costs, to stimulate employment demand and new hiring;
– Targeted wage support for viable firms facing ongoing disruption;
– Guaranteed access to rapid, high quality employment and training support;
– Increased enforcement of employment and redundancy rights; and
– Regular publishing of detailed HR1 data, to enable local economic partners to respond.

Source: Financial News