Nearly half a million redundancies expected by the end of this month
Where employers plan 20 or more redundancies, they need to submit a notification to the Insolvency Service.
Based on analysis of this data, the Institute for Employment Studies (IES) found that redundancy notifications are running at more than the double the levels seen during the last recession.
In June and July 2020, more than 300,000 employees were notified as being at risk of redundancy and IES estimates that around 450,000 redundancies will be made in total for the three months to September. This is a much higher figure than the quarterly peak (300,000) during the financial crisis.
As redundancy notices by firms tend to lead to actual redundancies, the IES estimates a further 200,000 redundancies in the final quarter of the year.
In total, it estimates there will be 650,000 redundancies in the second half of 2020.
However, the number could be greater, particularly where firms plan redundancies for fewer than 20 staff or because of non-reporting to the Insolvency Service.
But, the IES said it is possible that redundancies will be lower than predicted, particularly where overly cautious firms submit redundancy notices which they then fail to follow up on.
It said this would be consistent with what occurred following the recent, sharp rises in March 2018 (160,000 notices) and April 2019 (80,000 notices) where neither resulted in any “significant increase in actual redundancies”. It attributed this to “Brexit uncertainty”.
Based on the actual historic levels of redundancies taken from the Labour Force Survey (up to June 2020), it reveals that 240,000 people have reported being made redundant in the first half of the year.
The IES added that its scenarios don’t assume any further increases in redundancies as a direct result of furlough ending after October, or as a consequence of tighter social distancing restrictions.
“Both of these factors could lead to further increases in lay-offs over and above those estimated in the scenarios”, the report stated.
It added: “This analysis sets out that redundancies in the autumn will almost certainly exceed anything that we have experienced in at least a generation – with likely around 650,000 people (and potentially significantly more) facing the prospect of losing their jobs in the second half of this year.
“Sadly, much of this restructuring appears now to be inevitable and reflects both significant structural changes (either a result of, or accelerated by, the pandemic) and the damage already done to those firms most affected by the crisis.
“However, it is not inevitable that this level of redundancies must lead to mass unemployment. Even during the full lockdown period from April to June, more than half a million people started new jobs every month – just 5% fewer than in the same period a year earlier.
“So, we must ensure that we are supporting those facing redundancy to move back into work, while at the same time taking steps to minimise the number of job losses that occur.”
The IES laid out five proposals to stem the number:
- Boost employment demand by reducing labour costs
- Targeted support for viable firms facing ongoing disruption
- Guaranteed access to rapid, high quality employment and training support
- Invest in enforcement of employment rights
- Publish, monitor and act on redundancy data.