Gloomy picture for employment across the West of England

Fewer than one 1 in 10 businesses see positive side to COVID-19 pandemic, a survey undertaken by Business West has revealed.

Business West, the  not-for-profit company which offers business support to start- up and growing businesses across the West of England,  conducted its second major survey measuring the impact of COVID-19 on businesses in South West England.

The largest recent survey of its kind, 519 businesses across a wide variety of sizes and sectors responded to highlight the overwhelmingly negative impact of COVID-19, with 76 per cent stating that their experience of the pandemic had been ‘negative’ or ‘extremely negative’ and only nine per cent describing the impact as being ‘positive’ or ‘extremely positive’.

The survey also sheds significant light on uptake of the Coronavirus Job Retention Scheme (CJRS), present and future job losses, business confidence and likely shape of economic recovery across the region.

The survey showed CJRS was the most used government intervention before tax deferrals and Bounce Back Loans.

• 38% of businesses used CJRS to furlough three quarters or more of their staff
• 35% of employers didn’t use the scheme at all
• 65% expect redundancies to effect less than a quarter of their furloughed staff
• 68% of respondents didn’t expect to make any of their furloughed staff redundant

Despite the value of CJRS to many businesses, however, only six per cent of respondents said that the Chancellor’s £1,000 Job Retention Bonus will have a significant impact on whether or not they retain furloughed workers.

Nearly half have already made some posts redundant and a further 43 per cent will make redundancies between August and October 2020.

The survey revealed that nearly 90 per cent of redundancies will occur before November this year – a significant concentration of impact in a short space of time.

And employers have also taken extensive steps to reduce labour costs, with almost half cutting paid working hours.

But there are always some positives. 17 per cent of respondents took on additional staff since lockdown, and most businesses anticipate a return to pre-pandemic levels of activity next summer.

The most dramatic impacts, predictably, were on profitability where 61 per cent of respondents reported a decrease. 50 per centof respondents reported a decrease in cash reserves. Liabilities including loans had increased for 28 per cent of respondents.

South West businesses say home working is likely to be a key trend in the post COVID-19 ‘new normal’ with just over half of all respondents planning on a greater use of homeworking for at least part of their workforce.

Phil Smith, Managing Director at Business West, said: “With so much public discourse focussed on the ‘shape’ of the recovery, with ‘U’, ‘V’, ‘L’ and many other letters to choose, this survey offers real insight into how our region is affected by, and recovering from, the most significant economic shock in modern times. Unfortunately for the business health of our region, however, all our results point to a longer-term negative impact of COVID-19.

“The financial health of our region’s business community is vital to our area recovering and thriving, yet COVID-19 impacts cannot be overstated. Our survey shows business confidence has been badly damaged and there is reduced capacity to invest and grow out there. Fresh support is therefore required to restore business confidence and return businesses to growth, attesting the decline of recent months.

“The wider speed at which the economy and individual business income recovers will also be critical to levels of unemployment and underemployment moving forward. Our survey suggests that, other than the devastating personal impact of redundancy, some of the actions taken by businesses will be short term with no longer lasting implications for workers in the region. However, salary cuts, and a move to more use of part-time and home-based working based suggest a longer-term trend. Household purchasing power and confidence has suffered more of a decline than just the jump in the claimant count suggests, significantly hampering the chances of a consumer-led recovery in our region.

“One upside of coronavirus is the potential long-term benefits of homeworking and other behavioural changes on air quality in our region, however, the implications for commercial office space remain unclear.”