Half a million UK job losses forecast this autumn

Research group IES expects 445,000 dismissals to take place between July and September

Around half a million jobs are likely to be lost in the UK this autumn, far higher than job losses at the peak of the last downturn, a new analysis of recent dismissal notifications shows.

Figures obtained from government show that companies notified the Insolvency Service of around 380,000 staff at risk of dismissal between May and July, according to the Institute for Employment Studies, a research group. Most of these came in the latter two months, when dismissal notifications were running at five times the average rate seen between 2008 and 2020.

Actual job losses, which usually take place around two months after a notification, are likely to be higher because companies cutting fewer than 20 staff do not have to notify the Insolvency Service.

The IES said it expected 445,000 dismissals to take place in the three months between July and September, based on the relationship seen between notifications and job losses in recent years. Even if job losses then eased, following the pattern seen after the worst of the 2008-09 recession, there would still be a further 205,000 dismissals before the end of the year.

“This data lays bare the scale of the jobs crisis that we’re facing in the autumn”, said Tony Wilson, the IES’s director, adding that while “this restructuring cannot be averted entirely . . . we can do a lot more to minimise the job losses and support those who are most at risk”.

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The IES said it had not assumed any increase in job losses as a direct result of the government ending its support for wages through the furlough scheme, or as a result of tighter social distancing restrictions, both of which could lead to further increases in dismissals.

Business groups have warned that big companies are likely to announce a wave of job cuts from this week onwards, in preparation for the furlough scheme closing at the end of October. Unions are echoing calls for its extension, with Frances O’Grady, general secretary of the Trades Union Congress, set to urge chancellor Rishi Sunak on Monday not to “walk away” from working families.

Meanwhile Arcadia, the fashion group owned by Philip Green, apologised on Saturday for underpaying staff in its head office who were facing job losses while on furlough.

The group told Press Association that it was “extremely sorry” for the distress caused to staff whose notice pay had been calculated based on their 80 per cent furlough pay, rather than their usual salary. The policy had been wrong and all those affected would now receive full pay while working their notice, the group said.

Unite, the union, which has not yet withdrawn a threat of legal action against Arcadia, said the U-turn “puts down a strong marker to other employers” who might be considering similar tactics.

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Office for National Statistics surveys suggest that the share of private sector employees who are on furlough had fallen from around 30 per cent of the private sector workforce in May to around 11 per cent by late August, equivalent to around 3m people.

Michael Saunders, a member of the Bank of England’s monetary policy committee, said this month that many of those still furloughed were likely to be working in companies that were still not trading or faced much weaker activity, and that “a relatively high share may become unemployed”.

Official data due on Tuesday, covering the three months up to July, are likely to show the first significant rise in unemployment since the start of the pandemic, given that many people previously counted as inactive may have begun job-hunting when the hospitality sector reopened.