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Ending furlough will cause 'significant redundancies', warns ex-Sainsbury's chief
19 October 2020, 11:51
The end of the Government's furlough scheme will result in companies making "very significant redundancies" that will the hit young people hardest, a former Sainsbury's CEO has warned.
The furlough scheme, which will end on October 31st, allowed companies to put their employees on leave while keeping them on the payroll.
Under the scheme, employees would receive 80% of their gross salary up to £2,500 per month at no cost to their employer.
Despite nearing its end, the scheme is set to be replaced by a Job Support Scheme which will allow businesses to keep employers on shorter hours, covering ‘two-thirds of the pay they have lost through the reduction of their working hours.
Speaking to LBC's Nick Ferrari about the impact the furlough scheme's conclusion would have on the economy, former Sainsbury's CEO Justin King said: "Clearly any company that's facing level 2 or level 3 restrictions, it's very likely that the decision that they will have to make is redundancy.
"So I think it's unavoidable that we will see, over the next month as we run into Christmas, most, unfortunately, very significant redundancies and it will in particular be among the young."
Mr King's words have come as the British Chambers of Commerce has warned Boris Johnson that existing economic support packages will not be enough to stave off mass redundancies and business failures during the coronavirus crisis.
In a letter to Mr Johnson on Saturday, they raised particular concern about the Tier 2 restrictions imposed on London and other areas on Saturday because they "dramatically" hamper businesses without extra support.
The former Sainsbury's CEO also told LBC: "I think what I'd be saying to somebody [who owns a high street business] at the moment is batten down the hatches, because whether its...hospitality at level 2 [restrictions] and I think all retail at level 3, it's really not possible to have a viable business.
"So the high street such as it is today is going to have to really expect challenges for the medium term, certainly into the middle of next year I would suspect."