The UK is facing a “tsunami of job losses” once the furlough scheme comes to an end, according to the boss of Britain’s biggest recruiter.
James Reed, chairman of online jobs site Reed, told the Telegraph he feared the labour market is heading towards a “day of reckoning” when the government’s job retention is wound down.
The job retention scheme sees the government pay 80 per cent of wages – up to £2,500 a month – for staff who would otherwise be made redundant.
The Chancellor extended the furlough scheme earlier this month until October but told employers they would have to help meet its huge cost from August.
“The worry is what happens when furlough winds up,” Reed told the Telegraph. “Is there a wave of redundancies coming? The danger is a tsunami of job losses.” He added: “Companies I talk to are a half or a quarter of the size they were when they furloughed people, or they are on the verge of going bankrupt.”
Economists worry there will be a wave of fresh redundancies once the furlough scheme is wound down.
A recent report by the Chartered Institute of Professional Development (CIPD) found the UK job market is set for a “significant turn for the worse” over the next quarter.
The research underlined how critical the Treasury’s furlough scheme had been for employers, with those who used the initiative saying they would have had to make on average 35 per cent of their staff redundant without it.
Furthermore, the percentage of firms which expect to make redundancies in the next three months has only risen six per cent on the prior survey, to 22 per cent.