OPINION: Furloughing has been abused by 33% of employers and resulted in new work practices which are bad for the economy

For the million or so freelancers, self-employed and those recently offered jobs the furloughing scheme, grants and loans offered by the Government seem a slap in face since they have been left to fend for themselves. For those on the furlough scheme it has been three months of time at home during the lockdown and a chance to rethink their career, life and their priorities. Although salaries are down by 20% there are no commuter costs, childcare costs or paying for all those incidentals at work from sandwiches and a round of drinks on a Friday after work.

For employers of firms that have teetered on the brink of insolvency furloughing has been a stay of execution allowing them to apply for loans and grants in order to survive once the scheme ends. Of course these are sweeping generalisations but there is more than a strand of truth in these thoughts. But for many workers furloughing has been less than a period of peace at home. Around a third of employers have insisted their staff continue to work albeit for fewer hours than usual which of course in entirely illegal.

Others have been forced to work for a sister company meaning that in both cases the tax payer is subsidising these outfits as they are able to continue trading without having to fork out for 80% of staff wages. Some prosecutions have been made but the abuse is widespread according to a number of reports and surveys and a straw poll amongst friends and family have produced a similar statistic. At the end of last month HMRC had received 6,749 reports of ‘furlough fraud’ signalling a 53% rise during July with the numbers expected to increase during August. And for many employers furloughing has been a chance to downsize their operation and close outlets. A day hasn't gone by in the last three months when thousands of furloughed staff haven't been given their P45s.

With nobody going into expensive city and town centre offices some employers have had a rethink as to whether they even need the offices. Some have decided staff can work permanently from home and communicate on Zoom while others have given notice to landlords and decided on a smaller hub for meetings and weekly briefings with the workers only having to clock in at the office occasionally. The knock on effect has seen sandwich shops and cafes close in city centres and train and bus companies on the brink of collapse. Despite the protestations of many workers not everyone is as productive working at home compared to being in an office where managers can monitor work rate and there are no domestic distractions.

Critics such as Nicholas Bloom of Stanford Institute for Economic Policy Research point out that employers who expect their staff to work from home are off-loading the costs of running an office onto their workers. Electricity, gas, water and other utilities are paid by the worker, as well as insurance are passed on while many workers will be operating in unsuitable spaces. And there is the issue of mental health. Working in isolation with all the pressures of deadlines placed upon the shoulders of workers but with no colleagues to chat to brings with it more problems.

And there is the cost which has so far cost the treasury £31.7bn with a guestimate of double that figure to the nation’s economy as whole. Workers are not commuting, entering shops and restaurants, paying for fuel, booking holidays or spending disposable income in the way they would if they were in work. Each week that goes by the figures increase and after all the fear of catching Covid-19 put out by the Government in the last four months many are reluctant to return to their offices and factories. Indeed there is a Government campaign to convince people to return to work and as furloughing winds down which is contradicted by the scare stories, city lock downs and compulsory mask wearing. It is no surprise that many firms have opted to stay on life support for as long as possible.

Then there are the zombie firms who as soon as the furlough scheme begins to be phased out collapse into administration leaving the workers, suppliers and lenders high and dry. For companies who have managed to survive on savings but were unable to access the various Governmental financial life lines it sticks in the throat.

Furloughing has produced mass abuse of the system by unscrupulous bosses who saw it was ‘free money’ (such as Victoria Beckham and Manchester United who were both shamed into pulling out of the scheme) it’s helped to fertilise a recession by ensuring mass unemployment as it ends and worse still an expectation by many larger companies that they will be bailed out by the Government in future. As mentioned around a million self-employed workers, actors, personal trainers, consultants, company directors, freelancers and many more haven’t had the same luxury of being offered a financial life line. Furloughing may have been essential in March and April but should have been phased out far earlier as its effects down are bad for the economy and bad for society.

Harry Mottram