Why Sunak’s Jobs Support Scheme Is Not Enough For Hospitality, Retail, And Entertainment Sectors?

Summary

• The sectors hit hardest by the coronavirus pandemic face uncertainty over their future and say that the Jobs Support Scheme is not enough for them
• Hospitality, retail, and entertainment, among others, who have workers on zero-hours contracts would miss out on the Sunak’s jobs support
• In his winter economy plan, the chancellor categorically mentioned that the government can’t save every job

While announcing the Jobs Support Scheme recently, Rishi Sunak, Chancellor, UK Treasury had said that the people must be in viable jobs to gain from the scheme. By viable he meant only those jobs where employees were working for at least a third of their normal hours and were paid for the same by their companies. This condition could be leaving out various sectors that have been adversely impacted by the coronavirus led economic crisis.

The slowdown of the economy has been so acute that many industries have not been able to resume their operations after the onset of the pandemic in March 2020 across the UK. Entertainment, hospitality, and retail, among many others, who are struggling for survival and have workers on zero-hours contracts are expected to be completely missing out on the new jobs support. Let us take a closer look at each of these sectors.

Entertainment

The British entertainment industry has not even properly re-opened after the lockdown got over due to the fear of spreading Covid-19 infections. After the lockdown was imposed on 23 March 2020, the theaters were allowed to open on 15 August 2020. However, they did not attract a huge number of audiences for obvious reasons. Now, with stricter restrictions in place beginning 22 September 2020 to avoid a second corona wave, the enthusiasm of movie goers would further diminish.

Many of the theaters are still closed and their staff is redundant. They are therefore not eligible for the new employment scheme and are in for a gloomy scenario.

Moreover, the music industry in the UK seems to be doomed to a similar sad future, along with hundreds of freelancers who form the backbone of the nation’s creative sector.

Hospitality

The British Beer and Pub Association (BBPA) is upset that the Treasury plans have not gone far enough to protect a large number of jobs across the hospitality sector.

UKHospitality, the country’s trade association for the hospitality industry wished to engage with the government to work out a way for keeping its staff employed. The sector’s outlook remained grim as it hoped for some good news in the winter economy plan, which did not come through, said Kate Nicholls, chief executive, UKHospitality.

It is pertinent to note here that the chancellor’s winter economy plan had extended the VAT cut (from 20 to 5 per cent) applicable to the British hospitality sector from January to March 2021. The temporary reduction in the value added tax began in the month of July 2020 to drive the sector’s growth.

Retail

The physical stores needed government aid to support jobs, as shopping is moving online, according to the retail industry experts. The sector has already lost close to 125,000 jobs since the pandemic struck the nation. Usdaw Paddy Lillis, general secretary, Shopworkers Union stressed that the high street required a targeted recovery plan to effectively bridge the growing divide between the physical and online shops.

Let us now glance through few prominent companies in these domains of entertainment, hospitality, and retail.

Cineworld Group plc (LON: CINE): Cineworld is walking a very tightrope with new restrictions in place to stop a second wave of infections across the nation. The group is running out of money and had to undergo a loss worth USD 1.6 billion (pre-tax figures) for the period of January to June 2020. In fact, its net debt has amounted to be a whopping USD 8.2 billion by the end of June 2020.

Stock performance: The company stock had plummeted sharply since the beginning of the year 2020. It was trading at a value of GBX 220 on 2 January 2020 and had dropped down to a low of GBX 41.36 on 24 September 2020. The Cineworld stock (LON:CINE) was trading at a value of GBX 42.82 on 25 September 2020 at 10.22 AM, up by 3.53 per cent from its previous day’s close. The company’s market capitalization was recorded to be £567.79 million while the volume of shares traded at that time was 6,569,177. The stock had a negative YTD (year to date) return of 81.20 per cent and an EPS (earning pr share) of 0.13 per cent. The 52-week low/high range showed a wide variation of 21.38 / 232.10.

JD Wetherspoons plc (LON: JDW): The prominent pubs and restaurants chain was planning to slash 450 jobs at its airport pubs as the new curfew rules were imposed on the British hospitality industry on 22 September 2020 by the British Prime Minister. Pubs and restaurants have to close by 10 PM every night to limit the spread of the virus.

Stock performance: The company stock was trading at a value of GBX 822.50 on 25 September at 11.07 AM, down by 0.6 per cent from its previous day’s close of 827.50. The market capitalisation was recorded to be £996.15 million. The stock provided a negative year to date return of 50.69 per cent with an earnings per share of 0.71 per cent. Its 52-week low/high range was recorded to be 559.50 / 1,734.00.

Tesco plc (LON: TSCO): The leading retail chain has introduced rationing of essential goods amid panic buying to manage the second wave of pandemic across Britain. The purchase would be limited to 3 items per buyer for a small list of essential items. Tesco said that it had enough stock to last for a long time and the rationing is done to prevent unnecessary bulk purchases.

Stock performance: TSCO stock was trading at a value of GBX 255.8 on 2 January 2020 and had dropped to a lower value of GBX 219.10 on 24 September 2020. The company stock was trading at GBX 216.40 on 25 September at 11.33 AM, down by 1.23 per cent from its previous day’s close. The market capitalisation was recorded to be £21,457.55 million while the volume of shares traded at the time of recording was 4,292,924. The stock provided a negative year to date return of 14.35 per cent with an earnings per share of 0.10 per cent. Its 52-week low/high range was recorded to be 211.20 / 258.90.

To sum up, Rishi Sunak is clear that while the British economy is undergoing unprecedented times and people need government’s help, but the non-viable jobs can’t be supported indefinitely. The society has to face the inevitable reality one day or the other. His new jobs support scheme is expected to leave many sectors devastated in terms of almost nil employment support. These include entertainment, hospitality, and retail, among others. Going forward, the country has no option but to be prepared for more redundancy announcements in these worst impacted sectors.