Option of furlough extension should be kept open, say small firms, as 730,000 jobs lost

Responding to new Office for National Statistics (ONS) figures showing that there are an estimated 730,000 fewer employees on payrolls compared to March 2020, and the self-employed community reduced in size by a record 238,000 between Q1 and Q2 of this year, Federation of Small Businesses (FSB) National Chairman Mike Cherry said:

“The success of the Job Retention Scheme has kept our employment figures healthy over the past few months but reality is now starting to hit home.

“As our economy unlocks, many thousands of people will be looking for work over the next year. That’s why a focus on job creation – not just retention – is so critical.  

“The annual cost of running a small business has risen by at least £60,000 since 2011, an increase largely driven by surging employment costs. As we look to the autumn, the Chancellor should prioritise bringing the upfront costs of employment down, starting with Employer National Insurance Contributions. An Employer NICs holiday for small business owners who employ those furthest from the labour market would also mark an important step forward.

“In light of today’s figures, the future of the Job Retention Scheme will need to be reviewed closely. The option of a meaningful extension to the furloughing initiative should be kept open, especially now local lockdowns are a fact of life and a meaningful second spike in coronavirus infections is possible.   

“These fresh findings suggest that young people are already starting to bear the brunt of the latest shock to the labour market. It’s essential that the funding and subsidies for apprenticeships, kickstarter roles and traineeships unveiled by the Chancellor last month reach small firms swiftly – more than 90% of apprenticeships offered by small businesses go to those aged between 16 and 24.  

“To see our self-employed community shrinking so rapidly is frightening. Sole traders were absolutely integral to our recovery from the last recession, and the Government should doing all it can to help them play that same role again. Many people leaving payrolls will be thinking about striking out on their own, and they should be given the support they need to start-up, innovate and go on to create jobs and growth. This year’s Autumn Budget should include meaningful commitments to the New Enterprise Allowance and Start-Up Loans Programme.

“It’s important to remember that these figures don’t capture the experience of all those who are suffering. Thousands of company directors are desperately trying to keep their operations afloat having received no help from the Government for months now. We urgently need to see the Treasury spell out how it intends to help those who’ve been left behind.”

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As experts in business, FSB offers members a wide range of vital business services, including advice, financial expertise, support and a powerful voice in Government. Its aim is to help smaller businesses achieve their ambitions. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy.