Automakers seek longer UK furlough period

Automotive Industry

Source: Automotive News Europe, 2020-09-09

Automotive and aviation sectors in Britain are most in need of a furlough extension in order to protect key skills and research and development investment worth 5.9bn pounds a year to the UK economy, a survey of 226 employers by the industry group MakeUK has found.

UK manufacturers have called on the Chancellor of the Exchequer Rishi Sunak to extend his flagship furlough program during the coronavirus pandemic amid warnings that almost a third of companies plan to cut jobs in the next six months.

With Germany extending its equivalent program until the end of 2021, and France also considering an extension, Sunak has come under pressure to continue to subsidize wages beyond 31 October when the program is scheduled to end.

The survey found that 62% of companies want the program, under which the Treasury has paid as much as 80% of wages, to be extended beyond the end of October. With 30% of respondents saying they intend to cut workers, extension of the plan could avert a "wave of redundancies," the industry group said.

"The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running," MakeUK CEO, Stephen Phipson, said, urging "the greatest support possible" from the government.

"The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest," Phipson said. "Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so."

Economists have warned the premature removal of support threatens to send unemployment above 3 million in the UK before the end of 2020.

The industry group's survey also found that:

  • 69% of manufacturers currently have staff on furlough.
  • 37% think it will take more than a year for trading conditions to return to normal.
  • 18% are now operating at full capacity.
  • 42% have already cut jobs because of the pandemic.
  • 30% plan to cut jobs in the next 6 months, while a further 36% may do so in the future.

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