Small firms worried that staff won't return from furlough

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Date: 5 October 2021

A small business owner waits for her staff to return

New research has found that two in five small business owners are concerned that their employees may move on to new jobs now that the furlough scheme has ended.

Research by small business lender iwoca has found that 41% of small business owners polled say they are worried that their employees may not return to work after furlough; one in six think half of their furloughed staff will choose not to return to work; and 9% fear that none of their staff will come back.

Government data suggests that 1.6 million employees were still on furlough when the scheme wrapped up at the end of September. With over 520,000 small businesses still accessing the scheme in September, the findings suggest that almost 50,000 business owners believe that none of their furloughed employees will come back.

Many workers have been tempted to move jobs at this time because of the large number of job vacancies being advertised and others are looking to start their own business. Recent analysis of Companies House data by iwoca showed a 32% increase in the number of new business registrations in the first half of 2021 compared to the same period in 2019.

It means that more than two-thirds (64%) of small businesses will be looking to hire in the next year. Seema Desai, chief operating officer at iwoca, said: "The furlough scheme has been a lifeline for hundreds of thousands of jobs across the UK, but it's concerning how many small business owners who still have people on furlough fear that their staff won't return when the scheme ends.

"Managing staff turnover often requires significant time and effort, and it is likely that many small business owners will have to make this investment in the coming months in order to keep growing their businesses."

On a positive note, new research by Small Business Saturday, in conjunction with American Express, has found that 51% of people in the UK now say they back local independents more than they did before the pandemic. The findings also show that 49% of people feel greater positivity towards small firms.

Small Business Saturday UK returns for its ninth year on 4 December, following record breaking success in 2020 which saw an estimated £1.1 billion spent with small businesses on the day.

"The surge in support for small businesses underlines just how much our independents mean to people," said Michelle Ovens, director of Small Business Saturday UK. "Strong support from the public is critical for small businesses, many of which are heading into an uncertain period … it is really vital that people keep backing small firms throughout the winter months and beyond."

Written by Rachel Miller.

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