- The spate of job losses in the United Kingdom is not showing any signs of abatement even after the lockdown has been opened in the past three months
- DW sports announcement to appoint administrators has put the jobs of at least 1,700 of its staff under risk
- Hays travel also announced Jobs cuts of nearly 900 staff following the British government’s decision to impose a blanket ban on travel to Spain.
- HSBC, one of the largest banks of the UK would accelerate redundancies of 35,000 staff form its racks across the world
The spate of job losses in the United Kingdom is not showing any signs of abatement even after the lockdown has been opened in the past three months. Many major companies in the country have announced redundancies in the last month despite evidence of business activity picking up in key industries. Moreover, the withdrawal of the furloughing scheme in the month of October is also putting pressure on many companies who are not confident enough, that they would be able to recoup enough of their businesses by then. Today we look at three different companies from three different industries in the UK who have announced job cuts, along with a look at the state of their respective industries since the opening of the lockdown in May.
The case with DW sports and the retail industry in the UK
DW sports is a retailing and fitness company in the United Kingdom which operates 73 gyms and 75 shops across the country. The company had been one of the worst affected by the pandemic and the ensuing lockdown. The company has announced the complete shutdown of its retail portfolio including its online platform but will try to save as many of its gyms as possible.
The retail industry and the fitness industry are two of the worst affected industries by the present crisis. Most traditional shop-floor based retail outlets have lost a massive amount of market share in recent times to online retailing and several of them had to shut many of their outlets because it was becoming increasingly difficult for them to pay for their establishments and cost of other amenities while there was no income. Similarly, the fitness industry saw and extended imposition of social distancing measures, on their premises, making the operations of gyms and other types of fitness centres very difficult. However, they are not facing as much cost pressures in the form of rentals and other amenity costs like the high street stores of supermarkets face, hence are a little better placed.
1,700 jobs at DW sports are at risk because of the company falling into administration
The case with Hays travel and hospitality industry
Hays Travel has decided to lay off staff because of the government’s recent decision to put a blanket ban on travel to Spain. The company has stated that they suffered a number of cancellations of holidays to Spain following the announcement which has led to a worsened financial situation necessitating job cuts. The company has stated that the governments blanket ban was a blunt move and required a more sophisticated approach. There are many places in Spain that had much fewer infection rates than in Britain. Travel to destinations should have been allowed as several of the other large European countries like Germany have done. The company had last year hired nearly 2,500 of Thomas Cook staff after the latter fell into administrations and had till now been confident that they would be able to avoid retrenchments despite the challenging pandemic induced business environment.
Hospitality and travel industries were subject to enhanced restrictions following the breakout of the pandemic, due to them being more susceptible to circulate the virus than other industries. In most countries, governments have put enhanced safety protocols for starting the business activity in these sectors, and still many parts of the world are closed to business as they continue to be infected by the virus. However, since the opening of business in this sector in the United Kingdom, people are showing renewed interest to travel abroad for holidays, except for a few isolated cases like Spain, which recently has become unacceptable.
Hays Travel has decided to lay off nearly 900 of its staff, a move that has not happened in the company in the last four years. Of the 900 staff who would be laid off, 344 are travel consultant trainees, and 534 are going to be from its foreign exchange business. The company had previously put a number of its staff under the benefit of the government furloughing scheme, and the changes made to the scheme by the government on 3 August 2020 were a contributing factor in the company’s decision.
The case with HSBC and British banking firms having exposure to China
HSBC is one of the largest banking groups in the United Kingdom with large revenue exposure to the Chinese market. The company which started out in the city of Hong Kong has a large business exposure in the Asian continent and has recently suffered large losses in these markets due to the pandemic. The bank has set aside a sum of £2.9 billion this year for the potential bad debts this year emanating out of the pandemic impact. This sum is nearly seven times the charge it had set aside last year to cover for bad debts.
Most of the British banking companies operating in Hong Kong and China are facing an enhanced risk of losses through this year. The strained relations between the UK and China because of the new security law brought about by China this year in relation to Hong Kong is also a major contributing factor for the deteriorated business conditions.
HSBC plans to accelerate its planned redundancy of nearly 35,000 of its staff because of the COVID- 19 induced weak financial performance of the company.
State of Unemployment in the UK
The Employment conditions in the United Kingdom are in very bad shape and could have been in worst if the government had not rolled out the furloughing scheme. The situation, however, might change in October when the government withdraws the scheme as has been previously decided. As is clearly evident, there are many industries which have clearly yet not recovered fully for the government to withdraw this scheme. A sector-wise withdrawal of the scheme would be the most plausible measure that would suit the situation and different industries.