The harsh reality of business surviving the coronavirus was being made clear this week when the Chancellor announces that companies must start paying a quarter of the wages of furloughed staff from August.
As the lockdown is due to be eased, companies will now be allowed to take back furloughed workers part-time for as many hours a week as they want.
And companies using the scheme must make these new contributions even if they are still under lockdown.
They will also have to pay National Insurance although the government will continue to pay pension contributions.
We all knew the reduction of the wages subsidy was coming, of course, with the Chancellor Rishi Sunak warning us of an unprecedented recession with the loss of many jobs.
In fact, the British Chambers of Commerce – of which Business West is a major part – found that a third of firms cannot unfurlough staff as lockdown restrictions are rolled back.
I am not an economist but am an avid follower of David Smith, economics editor of the Sunday Times who wrote this week:
“The question is: for how many has the furlough scheme been a bridge back to normality as intended.
“And for how many is it an expensive way of smoothing the path to unemployment?
“We will know part of the answer at the end of July when the 80% scheme ends, and the full answer late October when partial support ends”.
So, the big question now for companies—especially those SMEs-is can they survive without the government financial support?
How many of our smaller companies will be able to afford to pay these new contributions under the job retention scheme when many have been without revenues coming in during the lockdown?
Furlough Fear is an illuminating survey by leadership coach Janine Woodcock of Zingg Ltd, one of Business West’s non-executive directors.
You can see my videocast with Janine on our Business West Trading Through Coronavirus website.