AT LEAST one in five Scots is currently either jobless or on furlough, leading to fears that Scotland is on the brink of mass unemployment and extreme poverty as the job retention scheme ends today.
New figures reveal that the number of company insolvencies during lockdown has dramatically dropped - with firm propped up by government schemes.
According to the Insolvency Service, in September there were 43 company insolvencies - a drop of 43% on last year.
Despite that the the number of unemployment benefit claimants has nearly trebled in some part of Scotland with some of Scotland's most affluent areas with historically lower levels of deprivation seeing some of the biggest rises in claiming either Jobseeker's Allowance (JSA) or Universal Credit (UC).
The numbers across Scotland claiming benefits have soared from 111,280 in November to 222,020 in October. But there are concerns there are thousands more who are out of work who are not able to claim.
On top of that, the latest HMRC figures show that 242,600 jobs were fully or partially furloughed in Scotland at the end of August.
READ MORE: What you need to know about the post-furlough changes
This is estimated to be highest in arts, entertainment and recreation with 42.8% of workers furloughed, and accommodation and food services at 35.8%, according to Scottish Government estimates.
Business leaders and unions fear a rise in joblessness without a more coherent package of measures to protect companies and staff.
Under the Job Support Scheme (JSS) which replaces the old furlough scheme from November and runs for six months, workers receive a minimum of 73% of their wages, with the government contributing 62% whilst the employers pay just 5%. Under furlough staff got 80% of their wages.
Concerns have been raised the more generous furlough support system is ceasing just as the public health situation with the coronavirus gets worse.
Save the Children in Scotland said that the end of furlough and the rise of restrictions during the second wave of coronavirus during Scotland's long winter offers a "bleak outlook for parents on lower incomes" and called for extended support for poorer families.
And the Federation for Small Businesses in Scotland said there is a real risk of a spike in joblessness, not just because the furlough scheme is being replaced, but because governments north and south of the border are not providing sufficient support for firms.
Andrew McRae, FSB’s Scotland policy chairman said: “Many Scottish bars, pubs and restauraunts aren’t trading at the moment, meaning they’re eating into cash reserves or taking on debt. Other businesses face significant restrictions on how they can trade or are being indirectly hit by the virus and the associated government response. All of this means that many businesses are considering downsizing or closing.
“Many smaller employers face heartbreaking decisions in the weeks and months to come, as these sorts of business owners often have a very close relationship with their staff. These smaller businesses didn’t cause the crisis, but they’re paying the price.”
A Herald analysis of Scotland's 32 local authority areas reveals that the City of Edinburgh, which is reliant on tourism and the hospitality sector which has been hit hard by the lockdown, is the nation's claimant rate rise hotspot, with the number taking benefits nearly trebling from 6,865 in November to 18,730 now.
Huge rises in claimants have also been found in more affluent local authorities highly sought after for local schools, including East Renfrewshire and East Dunbartonshire.
Clackmannshire has the second highest rise in claimants with a 159% rise over the 11 months, followed by East Renfrewshire (149%), Perth and Kinross (146%) and East Dunbartonshire (140%).
The shallowest rise has come in one of the most deprived local authority areas, Inverclyde, where the number of claimants has risen from 2,235 to 3,185 (43%), followed by North Ayrshire (59%) and Dundee City (65%).
The Scottish Trades Union Congress warned the risk of redundancy is hanging over many thousands of Scottish workers and the TUC, its cousin south of the border, said the UK "risks sleepwalking into mass unemployment and poverty". They call for a boost to financial support for those on low incomes as furlough ends and that no worker on the minimum wage should see their pay cut.
STUC deputy general secretary Dave Moxham said: "Trade unions are inundated with enquiries from people facing the sack or who have already been made unemployed. With rising infections everywhere, and major uncertainties about the Job Support Scheme, we are braced for further rounds of layoffs, particularly in the vulnerable areas like hospitality.
However, there is a danger in forgetting the parallel problem of extreme low pay and underemployment. This affects an even bigger pool of people. Almost half of Scottish workers have seen their pay drop after the pandemic. Needless to say, this has huge knock on effects for businesses: if wages keep falling and people cannot afford even the basics, demand will collapse and so will the economy.
"The only solution can be a more coherent and generous support scheme. At this stage, trying to penny pinch makes no sense. A massive, unprecedented depression is going to cost even more. Politicians need to rise to this challenge. No more half measures. Expecting workers to bear the brunt of this crisis is not only unfair, it’s dangerous to everyone."
The TUC says that wage subsidies should be kept at the original 80% where businesses are forced to close or cannot effectively operate.
The Scottish Chambers of Commerce were among those who feel that the new support programme would results in job losses expected to hit at the end November and beginning of December.
Dr Liz Cameron, chief executive of the leading business network said that while furlough had saved thousands of jobs, businesses had "reluctantly" been forced to make plans to let people go.
"The rise in the virus spread, has resulted in the Scottish Government introducing a new tiered approach placing additional restrictions on trading and travel. Inevitably, there will now be many businesses who will not be able to survive further restrictions with longer periods of closure. Jobs will be lost," she said.
"We need a more ambitious forward plan and a change of direction to enable all of us to live through and manage this situation. Businesses should be able to able to influence, lead and contribute into the decision making processes of our Government, working alongside them to resolve the key challenges this is presenting for us all.
Government and health officials must rebalance and expand the drivers in their decision making which gives equal consideration to the economic and health impact."
The UK Government said data showed that the original furlough scheme has successfully protected jobs - with 90% of people returning to the same job after being furloughed.
Save the Children in Scotland said that the end of furlough and the rise of restrictions during the second wave of coronavirus during Scotland's long winter offers a "bleak outlook for parents on lower incomes".
Claire Telfer, Save the Children’s head of Scotland, said life under lockdown had already been "remarkably tough" for Scotland's poorest children and said that the £20 a week boost to those on tax credits and universal credit beyond March.
The Chancellor's failure to announced an extension threatens to leave six million poor households £1,000 a year worse off from next April.
Ms Telfer said:"We know there will be increased pressure on families as job losses increase. Additionally, more time at home in the colder months and further restrictions will mean higher costs for energy bills and food and with Christmas just around the corner, we could see many families reach breaking point.
"The lowest paid sectors are likely to be hit the hardest, such as hospitality and retail, so people barely managing on lower paid roles could then find themselves struggling on universal credit.
"Families need incomes that can be relied on and costs that are manageable. Putting money in pockets is one of the best ways we can support families at this time. Introducing the additional £20 per week for poorer families until April has made a difference - but the same families could see themselves £1000 worse off if this is not made permanent, without any reassurances from UK government that they’ll be better supported through what could well be, one of the toughest financial times of their lives.
"We can still help to alleviate the pain felt by families struggling through the effects of Covid and we have a duty, as a nation, to make sure that Scotland’s poorest children don’t bear the scars of cuts.”
Economy secretary Fiona Hyslop has called on the Chancellor to ensure the lowest paid furloughed workers are properly supported through the Job Support Scheme (JSS) warning the change will cut the income of many of those affected to below the living wage.
She said: “While the introduction of the Job Support Scheme is better than furlough ending entirely, it does not go far enough in its new form. Indeed, it may only offer limited protection against redundancies to workers in sectors like tourism, hospitality, arts and recreation which continue to be badly affected, but that we know will have a post-Covid future.
“Our counterparts at Westminster must do more to protect low earning workers. If they look across the Channel to our nearest neighbours in France, they’ll see that individuals on the minimum wage already receive 100% salary protection.
“Unlike the Scottish Government, the UK Government has the borrowing powers necessary to provide appropriate funding to keep people in work and reduce the risk of mass redundancies and unemployment.
“The reality this winter is that many furloughed workers will fall below the real living wage – money they simply cannot afford to lose. While top ups may be available through Universal Credit, the five-week waiting period for new claimants often leads to financial and psychological distress."
The Chancellor, Rishi Sunak, said: “I’m pleased that the IMF this week called our response to the pandemic one of the best examples of coordinated action globally- the furlough scheme has been central to that, supporting 9.6 million jobs through some of the most challenging economic times.
“But it’s right that as we move towards a more targeted approach to tackle the virus, our support becomes more targeted too.
“The Jobs Support Scheme will continue to protect jobs throughout the difficult months ahead and is part of our comprehensive Plan for Jobs.”
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