Nearly 80 Per Cent of Restaurants and Pubs Staff Put on Furloughing Scheme: ONS Survey

It seems nearly all small and big sized pubs and restaurants have taken shelter under the Government Furloughing scheme. In a survey conducted by the Office of the National Statistics, the official forecaster of the British government, it has been found out that nearly 80 per cent of all staff of the country’s pubs, restaurants and other such small businesses have been put under the benefit of the Furloughing scheme by their employers that the government had come out with last month. The government had while announcing the scheme promised to pay upto 80 per cent of the salaries of the employees up to a maximum of £2500 whom these small and medium-sized businesses retained. Later on, towards the end of March, the scope of the scheme was expanded to include even large companies who were found to be ineligible to benefit from the governments’ other stimulus scheme, the loan guarantee scheme. In the past week, the government went ahead and extended the furloughing scheme by three weeks, the very next day a three-week extension to the lockdown was announced. The pandemic till now has caused major economic damage to the country with some predicting that the economy could shrink by as much as 13 per cent this year. Till now the pandemic has infected more than 138,000 people in the country out of which as many as 18,738 have already lost their lives.

The furloughing scheme was the first amongst a series of stimulus packages that had been rolled out by the British government last month which promised small and medium business owners in the country to bear as much as eighty per cent of the salaries of the employees of a business who are suffering from business slow down because of the pandemic and decides to Furlough part of or all of their employees. The scheme which at the time of conception had been forecast to cost the government about £10 shot up dramatically as it increasingly became clear that the number of businesses likely to seek the benefit of the scheme would increase exponentially would most likely cost the exchequer in excess of £40 billion. In previous report published by the Office for the Budget Responsibility (OBR) previously on Tuesday 14^th of this month, the forecaster had estimated that of the total workforce nearly 30 per cent of the employees in the country are expected to be put under Furlough benefit by their employers. It also went on to estimate further that despite the government extending its stimulus support the unemployment levels in the country is highly likely to rise by 2 million in the next few months which roughly sums up to 10 per cent of the country’s current workforce. The coronavirus pandemic since its arrival in the United Kingdom has forced the country first to practice strict social distancing measures and then into a strict lockdown with almost all businesses in the country reporting reduces activity and revenue level. The Office for the Budget Responsibility in its 14^th April report had also stated that on account of the social distancing and lockdown measures currently in place, the British GDP in the next quarter period between April and June could very well shrink by more than a third and for the full year of 2020, the GDP might shrink by nearly 13 per cent.

The British government is currently focused on the subject of jobs and is going all out to contain the increase in the unemployment rate in the country that has seen a sharp rise since the outbreak of the pandemic. However, despite this mega job support furloughing scheme, the unemployment levels in the country are expected to go up. The number of people applying for government welfare schemes has been piling up at its offices, and more are expected to come in the coming weeks. The relationship between employment and GDP growth is pretty straight forward. If the unemployment levels in the country are too high and for too long, there will be a greater chance that the country will enter into a recessionary period. The falling unemployment level is a danger sign that the British government has taken notice of and is also initiating all conceivable corrective measures to address it, as it wants to avoid a significant economic pitfall should things deteriorate from here. Restaurants, movie theatres and bars which see very high activity levels and a lot of casual spending by average citizens on a daily basis are also one of the largest employers in the country. The pandemic situation it seems is also having an adverse effect on the psychology of the people and is affecting their spending patterns. People are now more concerned about the future state of the economy and are growing more worrisome about the protection of their livelihoods and as a consequence are conserving money and are spending less on non-essentials and waiting for better times to prevail before they come out of their homes and live life as they used to live before.

As the pandemic broke out in the country, the movement of people gradually got curtailed to a complete government-imposed shutdown. The true might of this pandemic is in making the world paralyzed as we knew it till it first came into being. It is difficult to predict how long the social distancing and lockdown conditions will stay, putting further risk on businesses and employments and pushing the country further into a recession. As almost all business activity levels in the country have seen significant the anxiety levels among the people is also high. Despite all these measures the number of people applying for welfare benefits are staggering in the country, last week the British Work and Pensions office reported that the welfare benefit claims in the country have reached a figure of 1.4 million in the past one month, meaning that a massive expenditure burden is already in the hands of the government outside of the furloughing scheme. In the meantime, everyone is holding their breath and hoping that an early resolution is found for the pandemic in the country.