Rishi Sunak is facing renewed calls from businesses and MPs to extend the furlough scheme, amid warnings of mass layoffs.
Research published by the Fraser of Allander Institute today found 12% of firms will have to make significant cuts to staff numbers, while 43% stated they would have to make redundancies when the scheme starts to wind down.
More than 736,500 Scots have been on furlough, about 30 per cent of the total number of workers eligible for the scheme.
The UK Government has so far resisted calls to extend the support beyond October and plans to start reducing payments to firms are due to come into effect in a matter of days.
Rather than abandoning firms and workers, the Treasury must heed the dire warnings and act before it’s too late.”
Alison Thewliss MP
SNP shadow chancellor Alison Thewliss MP said: “Cutting the furlough scheme in the middle of the global pandemic, and ahead of a potential second wave, is dangerously premature and poses a threat to thousands of jobs across Scotland and the UK.
“With the first round of cuts to the income support scheme due to begin this Saturday, businesses are already having to plan for the worst – with new research revealing that more than half of surveyed Scottish firms will be forced to axe jobs.
“This is on top of the businesses who have already outlined earlier that they will have to cut staff numbers due to the economic hit caused by the health crisis.
“Rather than abandoning firms and workers, the Treasury must heed the dire warnings and act before it’s too late.”
In a bid to protect workers, ministers are to bring in new laws today to allow furloughed workers who lose their jobs to receive redundancy pay based on their normal wage.
The changes will mean those furloughed under the Coronavirus Job Retention Scheme are not short-changed if they are made redundant, the Treasury said.
Ministers said the changes will also apply to statutory notice pay and other entitlements, providing some reassurance “during this difficult time”.
Business Secretary Alok Sharma said: “The government is doing everything it can to protect people’s livelihoods and we are supporting more than nine million jobs through the Coronavirus Job Retention Scheme.
“We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to.
“New laws will ensure furloughed employees are not short-changed and are paid their full redundancy pay entitlement – providing some reassurance in an undeniably testing time.”