Almost half of businesses to cut jobs or stop hiring, CBI predicts

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ALMOST half of businesses plan on cutting jobs or freeze hiring altogether over the next year because of the coronavirus crisis.

An annual survey by the Confederation of British Industry (CBI) also shows how companies are gearing up to cut hours and restructure their workforce.

Almost half of businesses are planning redundancies over the next year

Around 46% of businesses said they plan on axing full-time jobs or stop hiring altogether, while 48% are looking to overhaul their company “as a priority”.

But 51% of firms told the CBI they expect to keep or increase the number of permanent roles.

In addition, one in ten companies intend to use the Kickstart scheme to create jobs for young people.

The findings come ahead of the government closing its furlough scheme in October, with the CBI calling for “another lifeline” to keep people in work.

Rishi Sunak has ruled out extending the Coronavirus Job Retention Scheme – but the Chancellor has hinted that a new package of support could be on the cards.

Mr Sunak hasn’t revealed details of what could be in store, but in an update to the Cabinet, he said the Treasury is looking at “creative” ways to tackle job losses.

Some 9.6million people have been furloughed by their employer since the start of the coronavirus crisis.

The warning from the CBI comes as UK unemployment rose to 4.1% in the three months to July with 695,000 workers losing their jobs since March, according to latest Office for National Statistics (ONS) figures.

The Institute for Employment Studies also this week predicted that half a million jobs will be lost this autumn as unemployment reaches its highest level since the mid-90s.

The Office for Budget Responsibility (OBR) recently also said that unemployment could hit 12% this year as the furlough scheme winds down.

This would affect 3million people, up from 1.3million in 2019.

The CBI spoke to 248 businesses for its latest survey.

Matthew Fell, CBI chief UK policy director, called on the government to open a new “short-time working scheme” for businesses who have a sustainable future after Covid-19.

He said: “The UK labour market has been under heavy stress since the outset of the Covid-19 crisis.

“Although the economy has started to re-open, pressure on firms remains acute.

“As the Job Retention Scheme unwinds, it’s crucial another lifeline is found.”

Carmen Watson, chairperson of recruitment agency Pertemps, said: “Results of the survey are generally consistent with recruitment market trends up and down the country. 

“It is not uncommon for permanent recruitment to drop significantly during periods of recession and, usually after a short recess, the temporary side of recruitment kicks back in.”

HOAR has contacted the Treasury for comment and we’ll update this story when we get a response.

Fresh calls have been made for the scheme to be extended over fears the UK could be hit with a “second wave” of redundancies.

Furloughed workers should find out this week if they’ll face redundancy when scheme ends in October.

London City airport, Pret A Manger and Marks and Spencer are among those to have announced redundancy plans.

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