Bosses warn of mass job cuts as furlough aid comes to an end

SCOTLAND faces mass redundancies in the coming months as the furlough scheme ends, business leaders warn.

Firms will have no choice but to axe staff between now and the end of October, they told MSPs yesterday.

It comes as figures show that the number of people in work slumped by 15,000 in Scotland in the past three months.

Nicola Sturgeon also delivered a stark warning yesterday of the ‘economic crisis’ ahead.

The overall number claiming jobless benefits has more than doubled in the past 12 months.

Meanwhile, across the UK some 730,000 people have lost their jobs since the Covid crisis began in March, figures show.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, told MSPs: ‘There is no doubt in our minds, driven by business intelligence data, that the furlough scheme has masked, and is continuing to mask, the unfortunate position we are going to be experiencing over the next two months – and that is really high numbers of redundancies.’

She said data from members showed 89 per cent had not yet made staff redundant but most firms will struggle to bring back employees after the furlough scheme ends.

Miss Cameron also agreed with figures from the Fraser of Allander Institute think-tank that firms are operating at around 60 per cent capacity – falling to 20-30 per cent for those in the hospitality sector.

Official statistics published yesterday show the number of people in employment in Scotland fell by 15,000, to 2.65million, from April to June – 34,000 below the same period last year.

Unemployment in the same three months rose 11,000, to 124,000 – 22,000 higher than the same period last year.

Scotland’s overall unemployment rate is now 4.5 per cent, up from 4.3 per cent in the last three-month period. It is higher than any other UK nation, against 4 per cent in England, 2.7 per cent in Wales and 2.5 per cent in Northern Ireland.

Data from the Office for National Statistics showed 222,300 people in Scotland were claiming jobseeker’s allowance or Universal Credit principally because they are ‘searching for work’. The total rose 9,100 from June and is 112,500 – 102 per cent – higher than July 2019.

Miss Sturgeon said: ‘These figures demonstrate again that, despite the UK Government job retention scheme and the support the Scottish Government is providing... the public health crisis of Covid is creating a very significant economic crisis.’

She pledged to tackle a rise in youth unemployment by establishing a ‘youth guarantee’ for 18 to 24-year-olds.

Economist Professor David Blanchflower told MSPs the pandemic has created an ‘absolute crisis for the young’.

Barry McCulloch, of the Federation of Small Businesses, said: ‘The Government needs to urgently review plans for furlough after the end of October.’

Scottish Secretary Alister Jack said: ‘We’ve set out our Plan for Jobs to protect, create and support employment.’

‘Absolute crisis for the young’