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In the wake of the government’s extension of income support last week, responses ranged from those who are saying it will delay the inevitable for many, to those arguing that it does not go far enough to protect jobs.

Rishi Sunak has described the U-turn as an important step to provide businesses with more certainty during this tumultuous time and save millions of jobs, with 80 per cent of wages being paid by the government to those on furlough beyond January 2021 into spring.

Change of approach

The move coincides with the second national lockdown that commenced on 5 November, designed to reduce turnover across the labour market as businesses are faced with temporary closure. However, the timeline itself did nothing to allay business concerns that the duration of lockdown may be extended. The prolonged economic support for businesses is projected to cost around £6 billion in the first month for the 5.5 million employees that fall under the scheme’s protection, as the Bank of England predicts.

A blunt instrument

Extending the Coronavirus Job Retention Scheme to all employers was the most straightforward option. However, criticism centres on whether these financial measures adequately target the right people. Those making redundancies will come under pressure to furlough instead. The Union Unite has called for Rolls-Royce to halt job cuts, that were already well underway in September, in light of these support measures being unveiled. These initiatives will still come to an end and many anticipate that there will be a corresponding spike in labour turnover.

In contrast, other employers feel that we have seen the worst of the redundancies and job losses that have already taken place, with those who could restabilise by using the furlough scheme having done so. Some have speculated that the announcement was delayed in order to save money on those roles already made redundant. The practicality of reinstating people is questionable, but the delay also forced employers to truly consider the impact of a second lockdown and their required workforce.

The ability to plan

The Chancellor pledged that “the security we are providing will protect millions of jobs”. Anyone made redundant after 23 September can be rehired and placed on the furlough scheme. However, critics including shadow chancellor Anneliese Dodds said that the measures came too late to provide many businesses with the ability to plan ahead, having made the decision to pursue redundancies already.

In such cases, it is doubtful that the ability to reverse these decisions around headcount would be pursued. The impact on employee morale must also be considered in such cases – employee trust in the reversal of a decision regarding redundancy would risk being permanently undermined. As Rishi defended his rapid change of policy as a ‘fast-moving’ response in a crisis situation, many are saying that longer lead times are required for businesses.

Weathering the storm

Strategies for dealing with coronavirus have echoed lessons learnt from the 2008 recession, further buoyed by the Coronavirus Retention Scheme, whereby employers have sought to retain as many staff as possible and ‘weather the storm’. Some of our customers are reporting that they have redeployed staff to other areas of the business to retain key talent and no redundancy plans are in place for 43 per cent at this time. This will be further buoyed by the significant change of heart to extend economic support to early 2021.

Lowest recruitment and retention issues since 2008

Businesses certainly anticipate fewer recruitment issues overall – 60 to 70 per cent usually report major difficulties in recruiting, which is down to around 20 per cent across various industries. These challenges have eased in this period, though they have not disappeared entirely, with 34 per cent of employers still paying a premium to attract new recruits. There is also the added pressure of driving employee morale in spite of constrained pay budgets facing employers in 2020, with one in four employers operating pay freezes.

Employers are having to creatively revise their people strategy during these tumultuous times, with many operating Total Reward Statements to underline the investment they make in staff beyond pay increases. Our recent sector-specific HR Groups discussed how they have responded to minimise the impact on their people and employee turnover. Many are taking the opportunity to holistically evaluate their reward strategy in light of ongoing restructurings and redundancies.

HR teams are taking the opportunity to review whether they have in place the right skillsets within their organisations going forward and targeting pay to retain top talent.

Communication is crucial

The situation changes so quickly, where feasible it is valuable for employers to call employees to update and reassure those who may feel isolated, confused and anxious. This can be confirmed by a follow up letter to outline next steps where the actual status of an employee is in a state of flux. The pandemic has made employee wellbeing more important than ever given the remote workforces in operation and isolation that lockdowns bring.

Communication and transparency from employers plays a vital role in maintaining employee engagement. Many employers have run pulse surveys, tracking morale and engagement. In some sectors, they received their best-ever results, but all sectors report a strong communications strategy led by management and CEOs which has maintained morale. Employers are mindful that March provided nice weather and unchartered territory, but going into the second lockdown is more of a risk as fatigue sets in with ongoing restrictions. The frequency of communications from senior management must be sustained to continue to drive engagement across remote workforces.

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