Employers around the world are struggling to deal with the economic impact of the coronavirus pandemic. It is not surprising as the pandemic created a lot of problems for the companies. Importantly, the state of the global economy is far from being ideal.
It is worth noting that, employers in Britain are planning more than twice as many redundancies than they did at the height of the last recession. As a reminder, about 180,000 job cuts were planned from January to March 2009. For example, 380,000 were planned form May to July in 2020.
According to researchers, completed redundancies could reach 735,000 this autumn. This information once more underlines the severity of the problem.
The government implemented social distancing measures to prevent the spread of coronavirus pandemic. As a result, many workers started to work from home. The U.K.’s economy came to a standstill. People should take into account that, the U.K. has one of the largest economies around the globe.
Many businesses have been forced to consider reducing their workforces by making employees redundant and it is hard to blame them. Governments around the world introduced restrictions. Thus, for several months international air travel all but disappeared and this is just one example. The pandemic created other problems for the people as well as companies around the world.
Employers and the state of the local economy
It is worth mentioning that, employers in England, Scotland, and Wales must notify the Insolvency Service if they plan to reduce the number of employees by 20 or more in any single establishment using a form called HR1.
As mentioned above, employers listed more than 380,000 positions as at risk between May and July 2020. The current redundancy wave is more than double the previous three-monthly peak of 180,000 from January to March 2009.
Hopefully, supporting jobs is a top priority for the government. For example, government measures include a kickstart scheme to encourage employers to create new training placements and apprenticeships. Also, extra work coaches in job centers and a £1,000 incentive to encourage employers to bring staff back from furlough.
Importantly, HR1 forms provide an early indication of what is happening in the labor market. However, HR1 redundancy figures do not include employers cutting fewer than 20 jobs. As a result, the final number of redundancies is usually higher.
The Office for National Statistics also publishes a redundancy count based on the Labor Force Survey. However, it takes several months to publish this data.
Notably, during the previous recession, actual redundancies were 80% higher than notified redundancies. Hopefully, companies sometimes announce plans regarding redundancies which they do not actually make as circumstances change. For example, in early 2019 saw a big spike in redundancy plans. Nevertheless, redundancy plans remained on the paper.
The coronavirus pandemic created tons of problems for companies around the world. Employers in the U.K. should cooperate with authorities to boost the local economy. Nevertheless, it will be impossible to save all jobs. However, they should try to keep as many jobs as possible.
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