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Richi Sunak just announced employers will start having to contribute to the furlough scheme from August.

 

My take is, so far employers have "been nice" allowing the tax payer to pick up the bill for employees that they had no intention of bringing back.

 

As soon as their is any cost on the employers side, even if minor, I am sure a lot people will be getting the boot.

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26 minutes ago, reddog said:

My take is, so far employers have "been nice" allowing the tax payer to pick up the bill for employees that they had no intention of bringing back.

 

I'd do the same if I was an employer. & thinking about it from a selfish perspective keeping on employees you *think* you won't need provided the tax-payer pays is a very cheap option on retaining them if things do miraculously pick up.

1 Aug less 30-45 day consultation less avg notice period (My understanding is that redundancy notice pay can be covered by furlough, but not the stat redundancy payment).
It'll be in the next 3 weeks. Some crafty employers will get employees to take holiday first then make them redundant.  

However... Many of these will be the same zombie companies that have been making losses year after year.  Sacking workers, Closing shops, closing offices etc crystallizes an instant accounting if not economic loss (Write-offs, onerous lease provision, dilapidation, stat redundancy payouts)that may be just as bad as retaining the employees and going bust in style 6 months later (After management have creamed off more salary on the hopes of some far-fetched turnaround). 

Edited by Council estate capitalist
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His plan will work. Employers paying 20% of salary is not a blocker for them and they will start running their businesses.

By August we may see, many small businesses opened (except those that gone completely bankrupt).

We're looking at economy bouncing back by new year.

Let's see if my prediction is right.

Those who are salivating at a massive HPC will be disappointed again and will wait another 20 years for it to happen. 

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15 minutes ago, Simhadri said:

His plan will work. Employers paying 20% of salary is not a blocker for them and they will start running their businesses.

By August we may see, many small businesses opened (except those that gone completely bankrupt).

We're looking at economy bouncing back by new year.

Let's see if my prediction is right.

Those who are salivating at a massive HPC will be disappointed again and will wait another 20 years for it to happen. 

Reported .

HPC will happen because it;s a bubble and all bubble's burst at some point. Haven't you observed the last 100 years of economic history? But this time it's different. right?

 

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It'll come down to profit and loss unless the company is run by idiots or philanthropists. I suspect most will be struggling to survive regardless and pending a miracle they will not pay the 20%. I mean why the hell would they, would you pay someone 20% of their salary to do nothing. 

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There will be loads more new business start-ups always will be......one fails another stars up.....lenders do not tend to lend well to start-ups without a big own cash investment and a brilliant plan..... a mortgage forget it?

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6 minutes ago, captainb said:

Where???

Even countries who have taken no action the virus has run out of steam. Almost like all the other respiratory viruses. 

I think the point is does it disappear over the summer and come back with a vengeance in the winter even more deadly. Just like the Spanish flu in the winter of 1918-1919.  We just don't know enough to say - hopefully not as the thought of a return to lockdown in dark miserable November is too much!

I doubt we can assess the full effects until these support schemes peter out and we get into 2021.

Edited by MARTINX9
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29 minutes ago, MARTINX9 said:

I think the point is does it disappear over the summer and come back with a vengeance in the winter even more deadly. Just like the Spanish flu in the winter of 1918-1919.  We just don't know enough to say - hopefully not as the thought of a return to lockdown in dark miserable November is too much!

I doubt we can assess the full effects until these support schemes peter out and we get into 2021.

Sunak and bojo will just be turning off the taps to scheme no 1 in November... I don't believe there will be a second furlough scheme even if bodies are piling in the streets. 

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39 minutes ago, winkie said:

There will be loads more new business start-ups always will be......one fails another stars up.....lenders do not tend to lend well to start-ups without a big own cash investment and a brilliant plan..... a mortgage forget it?

For the first time in my life I'm actually thinking of buying a cafe in my boy hood town up North. 30 min drive from Bamburgh castle. Could well be a very good time to invest in a real business.

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9 minutes ago, regprentice said:

Sunak and bojo will just be turning off the taps to scheme no 1 in November... I don't believe there will be a second furlough scheme even if bodies are piling in the streets. 

Although I have posted SECOND WAVE, I do not think that there will be second lockdown.

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8 minutes ago, regprentice said:

Sunak and bojo will just be turning off the taps to scheme no 1 in November... I don't believe there will be a second furlough scheme even if bodies are piling in the streets. 

The scheme detail was changed between the Telegraph and Guardian etc last night and the announcement today. It was going to be a 20% employer contribution from 1 August last night out of the 80% - it is now nothing (bar NI) in August, 10% in September and only a move to 20% in October. Within hours it seemed Sunak and the government caved to make it more generous.

Its only printed money they will never pay back anyway - the cost is mere detail!

https://www.theguardian.com/politics/2020/may/28/rishi-sunak-to-taper-furlough-scheme-forcing-employers-to-pay-20-of-wages

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I’m with the OP, there must be a load of people on furlough just because it cost the company nothing and it was the ‘right/nice’ thing to do (especially in SMEs) any cost will see them ejected.

However I can see that we won’t have such a cliff edge now. I guess it just depends on how fast they can get lockdown finished with as to how successful they will be.

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My wife has been furloughed now since end of March.

I doubt she will be pulled back before end of August based on current activity and don't  expect pick up by then. By end of August she'd not been seen at her place of work for over 5 months, pretty much a forgotten face and a painless choice for redundancy from the employer's petspective. There's no way they will be contributing 20% of her wage now they've adapted to her not being there - out of sight, out of mind.

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3 hours ago, Council estate capitalist said:

I'd do the same if I was an employer. & thinking about it from a selfish perspective keeping on employees you *think* you won't need provided the tax-payer pays is a very cheap option on retaining them if things do miraculously pick up.

 

I would probably also do the same, seeing as I wasn't (directly) paying.

 

However I would say the scheme could have been better planned from the start, like i.e. you can only use the furlough scheme, if you will take the employee back for 6 months minimum.

 

Having said that, I will admit we were all in new territory at the start of March. 

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2 hours ago, MARTINX9 said:

The scheme detail was changed between the Telegraph and Guardian etc last night and the announcement today. It was going to be a 20% employer contribution from 1 August last night out of the 80% - it is now nothing (bar NI) in August, 10% in September and only a move to 20% in October. Within hours it seemed Sunak and the government caved to make it more generous.

 

Personally I recon even paying just NI will tip a lot of employees into being layed off.  If you are in a tight margin business and deep down know you won't be bringing a particular person back, even the NI payment would cause you to layoff.

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Assuming employers NI plus 3% min auto enrolment pension.

August 16.8% (16.8/116.8) = 14.4%

September 26.8% (26.8/116.8%) = 22.9%.

October 36.8 (36.8/116.8) = 31.5%

Probably a lot depends on employee skill level,  you don't want to lose people who would take a long time to train replacements for when things pick up and if the company is bringing in any cash so can afford 15-30% of the cost of employment.

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39 minutes ago, Tulip_mania said:

Assuming employers NI plus 3% min auto enrolment pension.

August 16.8% (16.8/116.8) = 14.4%

September 26.8% (26.8/116.8%) = 22.9%.

October 36.8 (36.8/116.8) = 31.5%

Probably a lot depends on employee skill level,  you don't want to lose people who would take a long time to train replacements for when things pick up and if the company is bringing in any cash so can afford 15-30% of the cost of employment.

I recon just  14.4% woud tip a lot of employers getting rid of employees.

 

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42 minutes ago, reddog said:

I recon just  14.4% woud tip a lot of employers getting rid of employees.

 

In my personal experience a lot of employees will tip themselves into redundancy - discussing this with one of my clients today 

About 45 people furloughed and the support and contact from the business has been superb ( and they are topping up the furlough money ) yet interaction with the business from them has been abysmal - I would be all over it like a rash 

Makes it easy to cut and paste from furlough to redundant 

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It's happening already in my line of work. I read another forum for lorry drivers. One poster talked of his company announcing the process of making 100 drivers redundant starting next week. Another poster said a full time position was available at his company at Boston, Lincs, and 134 drivers have applied so far. This in an industry that for the last few decades has been reporting an HGV driver shortage of 50,000 drivers. 

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