The unforgiving pandemic: over 12,000 jobs cut in 2 days
Monday 6th July 2020
The coronavirus has left global economies on their last legs. Stock markets have plummeted, the risk of recession is high, the travel industry became virtually non-existent earlier this year and oil prices, for the first time in history, even dropped to below zero. However, in amongst all of that, millions of workers have been furloughed with many thousands more having lost their jobs altogether.
In the past week, two of the hardest-hit sectors by the coronavirus lockdown - aviation and high street retailers – have announced that over 12,000 people in the UK will lose their jobs. Retailers such as Arcadia (who own the likes of Topshop, Topman, Miss Selfridge etc) and Harrods, are planning to cut over 1,180 jobs combined. John Lewis has confirmed store closures, but it is not clear how many jobs will go as a result. The food and drink chain Upper Crust is set to cut up to 5,000 jobs, with the shirt maker TM Lewin also cutting around 600 workers. However, there are thousands more jobs set to go from companies such as WHSmith, Wrights Pies, Bensons for Beds, the Casual Dining Group (who operate Café Rouge, Bella Italia and Las Iguanas, and are said to cut over 1,900 jobs), the list goes on... But it is not only the high street retailers that are feeling the effects of depressed consumer demand. The aviation industry has also felt the full force of the impact of the global pandemic.
In as early as April of this year, global giant British Airways announced that they plan to slash over 12,000 jobs (nearly a quarter of their workforce), but Ryanair, EasyJet and the aeroplane-maker Airbus have also, in the past few days, followed in BA's footsteps. This comes after a more than 90% drop in demand for air travel in April and May, with travel also not being expected to return to its normal level of demand for upwards of three years. As a result, EasyJet has announced that 727 pilots and 1,300 crew will lose their jobs, with Airbus also announcing a cut of 1,700 UK jobs.
Why has the cutting of all of these jobs happened so suddenly? The UK government’s furlough scheme has so far enabled many businesses to keep their staff employed and try and reduce the number of people being let go. Paying employees' wages is generally the highest cost for most businesses and therefore the first area to take the hit. However, the furlough scheme (which currently benefits over 9 million workers by paying 80% of their wages, rather than the burden being on their employer) is set to be scaled back from August and will eventually end in October. As a result, employers (who have to let their employees know often 30-45 days in advance when making them redundant) have seen this as the time to act and let their employees go before the furlough scheme is reduced.
Michael Ward, Harrods' managing director, has described the pandemic as being the route cause for these reductions to the employer’s workforce. He further described the cuts to have been made with a heavy heart. In contrast, John Lewis was already planning before the pandemic to scale down the size of their business and reduce their number of shops. However, with the decreased demand from consumers in the past few months, this process could be seen to be accelerated and on an even greater scale than previously thought.
Should the government be doing more? The government can be seen to have spent billions of pounds in trying to reduce the wave of unemployment that is likely to occur as a result of the pandemic. The government has done this to not only try and secure people's jobs in the long run, but also as high unemployment would have a lasting damaging impact on the economy overall. The furlough scheme can be seen to have greatly reduced this impact, however the recent high increase in job cuts could suggest that the government strategy is now struggling. If sectors fail to return to 'normal' and consumer demand does not increase, too many people will end up chasing too few jobs and unemployment could be seen to increase further.
The future is largely uncertain, however one thing that is certain is the government will need to spend more money to combat the extensive economic shockwaves that are being felt in sectors such as retail, manufacturing and most notably aviation.
