• Emma Walsh

Furlough cut could be disastrous for businesses

Updated: Sep 14, 2021

Making businesses pay more to furloughed staff could be disastrous as they are trying to recover from Covid, unions have warned.





Almost 70,000 people in Wales were on furlough at the end of June.


Unions have warned changes from Sunday, doubling the amount firms pay, put jobs at risk and call for it to be delayed.


The UK government said the furlough scheme was in place until September to provide "certainty over the summer".


At the height of the pandemic last year, 378,400 people in Wales were furloughed.


But as lockdown restrictions eased, numbers on the government's coronavirus job retention scheme have fallen - with an estimated 68,800 furloughed at the end of June.


Staff returned to work in most sectors as the country reopened but some employed in the travel and hospitality industries remain on flexi-furlough - and work is based on demand.


What is furlough and why is it changing?

Furlough was introduced in spring 2020 to stop people being laid off by their employers during lockdown.


The government initially paid 80% of the wages of people who could not work, or whose employers could no longer afford to pay them, up to a monthly limit of £2,500.


But the scheme is being wound down, and since 1 July, employers have been asked to contribute 10% towards the wages of furloughed workers - with the government's contribution falling to 70%.


That amount is now set to rise to 20%. The monthly limit of £2,500 will stay in place, so workers will not notice the difference.


However, by making furlough more expensive for employers, the UK government hopes to encourage them to take workers back full-time if they can. The scheme is set to continue until 30 September.

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