By Liam McNeill, vice president, EMEA at UKG, and Nicole Bello, group VP, SMB & Channel, EMEA at UKG
With the furlough scheme now at an end, some employers face the choice between bringing their furloughed staff back in, potentially to do very little work, or to make them redundant. But to successfully manage the threats and risks this poses, business leaders must improve their agility and resilience, to take advantage of new opportunities and meet future challenges.
After being extended to October 2020 and then to April 2021, the Coronavirus Job Retention Scheme, or Furlough Scheme, has finally wound down at the end of September. As of July, ONS figures show that less than 8% of employees remained on furlough for most regions in England and Wales, and for many regions the figure was less than 5%. This equates to a million people across a wide range of industries.
This still means that at least one in every 20 employees have remained on furlough until it was wound up and that amounts to hundreds of thousands of workers across the country. As the scheme ends, we’re heading toward crunch time for decisions to be made about these workers and their return to work, or otherwise. Many employers contemplating job cuts will have carried out their redundancy exercises already. However, the number of redundancies will surely increase now the furlough scheme has ended. What is critical is for many organisations is not only how to handle this process, but to look at what talent resource they retain and how that is squared with a rise in productivity.
UK productivity – measured in terms of output per hour – improved in Q1 2021 after a small overall increase of 0.4% in 2020, despite the economy contracting 9.8% and with many still on furlough. Output per hour also rose 0.8% quarter-on-quarter (q/q) and 1.0% year-on-year (y/y) in Q1 2021.
While we expect most of these staff to return to their previous roles, a significant number will not. In recent months, redundancy figures have been relatively low. Indeed, in August 2021, they were at their lowest level in seven years. This is likely to be because many employers had already made large scale redundancies in the past 18 months and have no appetite to do a fresh round of morale-sapping job cuts if they can possibly avoid it.
Choosing the right HR technology to support your organisation is vital. It requires a full understanding of overall business objectives, strategies, and how these two channels align within your company. This means that you can make effective and forward-thinking decisions that not only help the business, but its employees too.
UKG specialises in human capital management, payroll, HR service delivery, and workforce management solutions. Our customers’ objectives range from improving employee engagement and retention rates, to driving greater workforce productivity and gaining a deeper understanding of operational insights.
The end of the furlough scheme will pose significant challenges for SMBs as they re-evaluate the health of their business based on customer demand and the overall labour costs which are going to rise. This will be further compounded by the rise in National Insurance employment costs due to come into force in April next year. Without a modern workforce management tool, the insight needed to manage these aspects may feel impossible. While some economists expect most of these staff to return to their previous roles, a significant number will not and as we face into the end of Government support for businesses the only certainty is that SMBs need insight to help them prosper.
Put simply, these tools enable managers to easily and accurately put the right people, in the right place, at the right time. We are entering a period of major economic uncertainty with the real potential of many people facing redundancy as businesses attempt to adjust to a new economic environment. Much has been written about the so-called Great Resignation, perhaps business leaders now need to think in terms of the Great Uncertainty.