Giving evidence to the House of Lords Economic Affairs Committee yesterday (15 September), UKHospitality's chief executive Kate Nicholls praised the Chancellor’s recent Plan for Jobs in assisting businesses to retain employees.
However, she added that the hospitality sector faced significant uncertainty in demand and trade in the months ahead.
With the Coronavirus Job Retention Scheme (JRS) set to wound down at the end of October, the trade body is calling for a targeted employment package to ensure mass job losses across the sector are prevented.
The proposals include asking the Government to part-fund hours for businesses that have returned, paying up to 50% of wages for those back at work; and offer enhanced support for hospitality businesses that are closed (or part-closed) as a result of local lockdowns by covering 50% of wages, with the remainder paid by the employer.
It has also called for a bespoke financial support package for legally closed businesses – to include an ongoing allowance for staff, training and rent; and fully funded training packages for employees in depressed areas.
The warning comes after the latest figures showed that the UK unemployment rate has risen to its highest level for two years, with those aged 16 to 24 suffering the biggest drop in employment compared with other age groups.
Nearly 100,000 jobs were lost in hospitality over the last three months, despite the furlough system still being in place.
“The people that work in hospitality are key to its success and we are very proud of the fact that we are the third biggest employing sector in the country," said Nicholls.
"As a sector we provide fantastic employment opportunities for everyone – including offering young people their first taste of the world of work.
“It is undeniable that this crisis has massively damaged our ability to employ. Parts of the sector remain closed; a whole range of activities are not permitted; and the rest remains substantially below capacity.
"As a sector we have utilised flexible furlough to get as many people as possible back into the world of work, but we are at a very delicate stage.
“Redundancies have risen, driven by Company Voluntary Agreements caused by landlords demanding rent payments.
"Of those staff that remain around half are back at work. A further 16% are on flexible furlough. Just over a third of the sector remains on full furlough.
"We are concerned that this leaves at least 900,000 people in our sector at risk of redundancy without further support.”
“The hospitality sector has a proven track record in delivering jobs growth. But we need Government to be flexible in its approach and to provide the necessary support over the bleak winter months in order for our sector to continue to play a role in the economic recovery.”
Calls have been growing steadily in the last week for the Chancellor to consider targeted extensions to the furlough scheme.
Yesterday, Labour leader Sir Keir Starmer called for the JRS to be replaced by a more flexible system to avoid mass unemployment.
Addressing the annual TUC Congress, he said the Government should replace the furlough scheme with a targeted system that provides support both to sectors still suffering because of the crisis and areas hit by local lockdowns.
