New figures released today by the Office for National Statistics (ONS) reveals that unemployment in the hospitality industry is higher than in any other U.K. sector. Trade body UK Hospitality says it highlights the scale of the crisis currently being faced by businesses and emphasises the need for additional support.
The U.K. unemployment rate was today estimated at 4.8 percent, 0.9 points higher than a year earlier and 0.7 percentage points higher than the previous quarter. The ONS research found that between July and September 2020, “the largest annual decreases were observed in accommodation and food services (down 261,000 on the year to 1.56 million).” The largest increase in unemployment came in the same sector: up 56,000 on the year to 161,000. In August, it was reported that 22,000 restaurant workers had lost their jobs, despite government measures introduced to try and mitigate redundancies and protect roles. By comparison, only 11,280 jobs were lost in the industry in the whole of 2019.
UK Hospitality chief executive Kate Nicholls said today: “The figures [...] underline the dreadful hit that hospitality has taken during this crisis and reinforces the urgent need for targeted support.
“Our sector has seen the highest fall in jobs of any. We are entering another period that is likely to be incredibly difficult for us. Businesses are in lockdown once again and when they do reopen, it will be back into a severely restrictive environment.”
Nicholls is concerned that if and when restrictions are lifted, fresh measures, like those in place before last week’s lockdown, will be reintroduced: the 10 p.m. curfew, no household mixing, and mask wearing. But the truth right now is that no one knows what course the virus will take, nor what the future looks like for businesses. 2020 has been characterised by uncertainty; at this point, that looks unlikely to relent into 2021.
Nicholls recognised that the government’s extension of the furlough scheme until March next year “will provide some protection” but she protested against the government’s scrapping the job retention £1,000 bonus scheme, which was due to be paid (per member of staff retained into January next year) as a “major blow at a time when things could not be tighter.” She said this would dramatically impact cashflow and potentially make “businesses technically insolvent.”
More, Nicholls said that the terms of furlough, while covering 80 percent of wages for hours not worked, will require employers to cover the cost of National Insurance Contributions (NICs) and holiday pay (which was not a condition between March and July), while receiving no revenue. “The majority of businesses are operating at a loss, with little to no financial reserves and the prospect of a bleak winter ahead,” she said.
Last week was the fourth time chancellor Rishi Sunak has been pressured to extend the furlough scheme just as it was due to expire. This insufficient warning for changes that allow businesses to retain jobs they otherwise couldn’t has resulted in them being forced to make decisions (and redundancies) without the guarantee that financial support would be extended, decisions that could have been avoided with sufficient warning. But this hindsight is too late for the people made redundant. The government appears to recognise this, if belatedly: for this iteration of the scheme, those employed as of 23 September and on the payroll on or before Friday 30 October can be rehired and subsequently furloughed by the employer.
Nicholls concluded: “Government support should recognise that hospitality is being asked to operate under the toughest restrictions of any sector and being given the highest mountain to climb in order to survive — we need a new approach from 3 December [the day after lockdown is scheduled to end].”