Rishi Sunak is set to announce this week that SMEs will have to cover anything between 20-30 per cent of the cost of furlough. Concerns have been raised by the SME club as to how many businesses will cope and survive.
This equates to SMEs having to fork out £500 per month to keep each staff member on furlough if they’re claiming the full £2,500 amount.
And many owners will also have to pick up the cost of national insurance contributions on top, on average 5 per cent of wages. According to the accountancy firm Wellers, this would cost an additional £245.73 per month, bringing the new monthly cost for each furloughed employee to over £700 a month.However, the government has confirmed it will still cover the cost of pension contributions. The fear is that many SMEs, especially those in leisure and hospitality, will be forced to start making redundancies to survive, as the Treasury effectively ends the Coronavirus Job Retention Scheme (CJRS) in August, not October. The hospitality sector, which is likely to be the last sector to reopen, estimates that 2m jobs will be lost as workers come off the furlough scheme. Shops have been allowed to reopen from June 1 but with a cratered economy and uncertain demand, shopkeepers do not know whether they can justify bringing somebody back full time. The SME club has started a campaign to help shops across the uk #saveourshops. Find out more here.
So far more than 8 million people have been furloughed, equivalent to one third of the private sector workforce.