More than 70% of private firms have furloughed staff in response to the coronavirus lockdown, according to the latest survey of Britain’s struggling business sector.
The British Chamber of Commerce said responses to its weekly Covid-19 tracker poll revealed the proportion of firms that have furloughed at least some staff increased to 71% this week, from 66% last week.
An escalating cash crisis meant that 59% of firms reported they have – at most – three months of funds in reserve, the BCC said.
On Monday more than 140,000 firms applied for the government’s Coronavirus Job Retention Scheme, which pays 80% of a workers salary up to a cap of £2,500 a month to stay at home.
However, the BCC survey found that many more companies will need to access the scheme, which is run by HMRC.
About 30% of firms have sent home between 75% and 100% of their workforce.
Adam Marshall, the BCC’s director general, said many firms needed the government cash before April’s payday this week.
“This is a crunch week for businesses relying on the job retention scheme to pay their staff,” Marshall said.
“HMRC’s capacity to deal with the demand from business has been encouraging so far. It is now critical that payments from the furlough scheme reach businesses as smoothly and as quickly as possible in order to protect jobs and livelihoods.”
Figures showing the increase in firms using the furlough scheme followed official data that depicted a weakening jobs market as the UK prepared to enter the coronavirus lockdown period.
Figures covering the three months to the end of February showed the economy struggling to overcome Brexit uncertainty and the impact of cuts to welfare benefits that forced many older women and young people to take low-paid employment.
Unemployment increased from 3.9% to 4.0%, the number of job vacancies edged lower for the tenth consecutive month and wages continued to fall from a peak last June, the Office for National Statistics said.
In recent days the UK has seen a sudden sharp increase in Covid-19 infection numbers, leading to fears that a second wave of cases is beginning.
Epidemics of infectious diseases behave in different ways but the 1918 influenza pandemic that killed more than 50 million people is regarded as a key example of a pandemic that occurred in multiple waves, with the latter more severe than the first. It has been replicated – albeit more mildly – in subsequent flu pandemics. Until now that had been what was expected from Covid-19.
How and why multiple-wave outbreaks occur, and how subsequent waves of infection can be prevented, has become a staple of epidemiological modelling studies and pandemic preparation, which have looked at everything from social behaviour and health policy to vaccination and the buildup of community immunity, also known as herd immunity.
Is there evidence of coronavirus coming back in a second wave?
This is being watched very carefully. Without a vaccine, and with no widespread immunity to the new disease, one alarm is being sounded by the experience of Singapore, which has seen a sudden resurgence in infections despite being lauded for its early handling of the outbreak.
Although Singapore instituted a strong contact tracing system for its general population, the disease re-emerged in cramped dormitory accommodation used by thousands of foreign workers with inadequate hygiene facilities and shared canteens.
Singapore’s experience, although very specific, has demonstrated the ability of the disease to come back strongly in places where people are in close proximity and its ability to exploit any weakness in public health regimes set up to counter it.
In June 2020, Beijing suffered from a new cluster of coronavirus cases which caused authorities to re-implement restrictions that China had previously been able to lift. In the UK, the city of Leicester was unable to come out of lockdown because of the development of a new spike of coronavirus cases. Clusters also emerged in Melbourne, requiring a re-imposition of lockdown conditions.
What are experts worried about?
Conventional wisdom among scientists suggests second waves of resistant infections occur after the capacity for treatment and isolation becomes exhausted. In this case the concern is that the social and political consensus supporting lockdowns is being overtaken by public frustration and the urgent need to reopen economies.
However Linda Bauld, professor of public health at the University of Edinburgh, says “‘Second wave’ isn’t a term that we would use at the current time, as the virus hasn’t gone away, it’s in our population, it has spread to 188 countries so far, and what we are seeing now is essentially localised spikes or a localised return of a large number of cases.”
The overall threat declines when susceptibility of the population to the disease falls below a certain threshold or when widespread vaccination becomes available.
In general terms the ratio of susceptible and immune individuals in a population at the end of one wave determines the potential magnitude of a subsequent wave. The worry is that with a vaccine still many months away, and the real rate of infection only being guessed at, populations worldwide remain highly vulnerable to both resurgence and subsequent waves.
The weakening outlook contrasted with the rising employment rate, which continued a long-term trend after it reached a record of 76.6%, which was 0.4 percentage points up on the year and 0.2 percentage points up on the quarter.
“Estimates for December 2019 to February 2020 show a record 33.07m people aged 16 years and over in employment, 352,000 more than a year earlier,” the ONS said.
This annual increase was mainly driven by women in employment – up by 318,000 on the year to a record high of 15.7m and workers aged above 50 years, who added 258,000 to the total to a record high of 10.7m. The number of people aged 25 to 34 years also reached a record high – up by 96,000 to reach 7.64m.
Women above the age of 60 have entered the jobs market in droves over recent years following an acceleration of the government’s push to equalise pension rights between men and women, forcing many women to wait longer to claim their state pension.
The increase in self-employed workers – up by 195,000 to 5.03m over the last year – outstripped the increase in the number of full-time employees, which increased by 184,000 over the same period to 20.87m.
However, annual wages, excluding bonuses, fell from 3% in the three months to January to 2.9% in February and in real terms slumped to 1.3%.
John Philpott, director of The Jobs Economist consultancy, said: “The UK labour market looks to have cooled before the Covid-19 lockdown measures placed the economy in a coma to help save lives.
“Although the number of people in work increased by a fairly healthy 172,000 in the three months to February this was not enough to prevent a rise of 58,000 in the number unemployed, lifting the unemployment rate back to 4%.
“Cooling was also evident in a fall in total hours worked, fewer job vacancies and softening in the rate of growth of average weekly earnings.
“Given what we know about the massive shock to the economy in the past month, it’s disconcerting to see that the jobs market was already starting to look a bit off colour when Covid-19 arrived on our shores.”
The minister for employment, Mims Davies, said that while the jobs figures had been overtaken by “the worst public health emergency in our lifetimes”, the statistics,
including a 4% unemployment rate, “do serve as an important reminder of the strong foundations we have built as we look to withstand impact on the global economy.”
