Businesses are planning far fewer redundancies than they were a year ago amid growing confidence about the UK’s economic recovery.
The number of redundancies planned by UK businesses dropped by 86 per cent in the third quarter of 2021 compared to a pandemic peak one year prior.
In the third quarter of 2020 the number of planned redundancies peaked at 290,000. It has dropped in every subsequent quarter, reaching a low of 40,601 between July and September 2021, according to data from the law firm GQ Littler.
The firm attributed the decline to increasing business confidence about the state of the economy prior to the outbreak of the Omicron variant.
“The steady drop in planned redundancies suggests employers had been taking an optimistic view of the future,” said Raoul Parekh, partner at GQ Littler. “However, the rapid emergence of the Omicron variant has knocked that confidence especially in the retail and hospitality sectors.”
According to the latest ONS data the redundancy rate in the UK reached 14.4 per thousand between September and November 2020, the highest level since records began in 2009. The figure has steadily declined in the months since, reaching a low of 2.8 per thousand in the same period of 2021.
“Given the sudden shock to the economy caused by the pandemic, it’s not surprising that the immediate response by some employers was to make cuts,” Parekh continued, pointing out that there existed uncertainty over what support would be offered by government.
“However, employers who jumped the gun and didn’t consider furlough before making cuts could find themselves being brought in front of an employment tribunal. We’re just starting to see the first cases coming through, and the position is still not clear,” he added.
The data on planned redundancies is drawn from information that employers are obliged to submit to the Insolvency Service if they intend to make 20 or more employees redundant within a period of 90 days.