Comment

Nine million furloughed on a wing and prayer

A recent BBC article quoted analysis by the Resolution Foundation, who in turn had used data the British Chambers of Commerce (BCC), that around nine million employees have been furloughed during the COVID-19 crisis.

The unspoken truth of this is that the Employee Retention Scheme (ERS) is a short-term win which has potential long-term ramifications and this need to be addressed immediately by the government.  It seems that in a rush to deal with the issue of business (in many, if not most, sectors being impacted, often severely by the pandemic) acting prudently for the sake of the business security by managing their main costs, the effect of the scheme in the medium to long term has been ignored.

The lack of clarity over how the scheme works and how business will be recompensed needs to be addressed in a time critical manner beyond all recognition.  For many businesses, right now, the game is cash flow, if the ERS doesn’t deliver, either through failure of process or planned delay in payments, then the scheme will fail. The result will be that employers are left with no choice but to revert back to traditional methods of cost control i.e. wide-scale redundancies. 

In no way am I saying the ERS is bad, in fact, I feel it was one of the most bold and decisive acts by a politician for a long time.  But a few points still need to be borne in mind. The old adage of the devil being in the detail holds true with this more than ever, clarity over the time for the scheme to be in place is critical for businesses to start planning post the scheme (even if this means an impact of employment figures for the UK, at least it will be an accurate representation of the landscape rather than political posturing which it could be seen as now).  

While business owners are struggling to understand their position and develop plans to seize the opportunities and options that lie ahead of them, the level or lack of detail provided means the clarity of way forward and control of costs and staffing levels is something that no business expert/advisor would recommend in assisting a business to deliver during these times. 

Therefore, my overriding question for any business owner, director or manager at the moment is this – does the employee retention scheme actually deliver benefits for your business or does it lay more uncertainty and more questions in the coming months? 

However, businesses have taken a giant leap of faith in the Government and that’s to be applauded. It would be all too easy to down tools, close the shutters and take the money. But that’s to say entrepreneurs would look back at the years of hard work, sleepless nights, pride and pleasure in seeing the idea come to a blossoming fruition were all for nothing. 

These businesses have embraced the unknown of the ERS in order to protect the short-term impact on both the country and individuals.  They have laid aside the potential ramifications leaving them to be dealt with another time, as these businesses understand that we, as a society, need to come together as a collective to get through this.  It is easy for the media to focus on the stories of businesses that appear to be exploiting this crisis as an opportunity, it might also be seemed as out of kilt to be acknowledging the efforts of those who aren’t seen at the forefront of the fight against this pandemic.  

Let me stress, in no way, am I saying this is an easy choice, I am not requesting that the role of SME businesses need to be given praise for their actions in this time, I freely acknowledge and embrace that in the grand scheme of things we are bystanders. We are in awe of the amazing work of the NHS staff on the frontline, the key workers and the people who are keeping society running day to day at the moment.  

However I am saying and I hope that one day, in the not too near distant future, the role of the business who embraced the ERS scheme in order to protect their employees, at a time when their business was having difficulties, they understood the need to be part of the collective rescue of their society. Maybe one day this will be seen as an amazing helping hand towards a better place for all of us.


Nick Gold, Managing Director of Speakers Corner

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