Changes to furlough scheme could be 'make or break' for South West businesses
From today employers will have to contribute 10% to staff's wages
Changes to the furlough scheme could be 'make or break' for businesses in the South West.
From today (July 1) employers will be asked to contribute 10% of furlough pay to employees who are still on the scheme.
That will increase to 20% on August 1 before the scheme finally winds down at the end of September.
It's feared this could spell disaster for many businesses still struggling since the end of lockdown restrictions were postponed to July 19.
As of June 3, there were 962, 600 people still on the furlough scheme.
Ian Mean, Director of Business West, said: "If you're a tiny company and you've been surviving this long, then you will be able to survive longer.
"But other who have been really struggling may find that the time has come to call it a day.
"Businesses in the food an accommodation sector will most likely be hit particularly hard by these changes to the furlough scheme as well as micro-firms who have a small number of employees."
When an employer contribution was introduced in September 2020 there was a large fall in the number of people furloughed and an increase in redundancies.
However, taking people off furlough and making them redundant is not necessarily the best option for employers.
Redundancies bring with it their own financial burden as neither redundancy payments nor notice periods are covered by the furlough scheme.
Ian Mean continued: "There needs to be more of a focus on re-training people for different jobs and also apprenticeships.
"This isn't just affecting young people. Older people, who have perhaps stayed in the same job for most of their life, will need help to re-train to prevent a tsunami of people becoming unemployed.
"The furlough scheme cannot last forever but there must now be a focus from the Government to create a training package to help people and businesses alike".