The UK is facing a “tsunami of job losses” when the Government’s huge support for workers’ wages is wound down, the boss of Britain’s biggest recruiter has warned.
James Reed, chairman of online jobs site Reed, said he feared the labour market is heading towards a “day of reckoning” when the support ends.
“The worry is what happens when furlough winds up,” he said. “Is there a wave of redundancies coming? The danger is a tsunami of job losses.” Mr Reed added: “Companies I talk to are a half or a quarter of the size they were when they furloughed people, or they are on the verge of going bankrupt.”
Economists fear a second wave of redundancies could sweep the UK as the furlough scheme is rolled back, threatening to derail the economy’s recovery.
Some 856,500 people made new benefit claims in April, six times higher than any point in the financial crisis, while eight million are furloughed.
The jobs retention scheme could be propping up so-called “zombie jobs” that would not survive without the support. The Government pays 80pc of furloughed workers’ pay to prevent mass unemployment by the lockdown.
The economy is unlikely to have staged a full recovery before the scheme is wound down, putting jobs at risk. Mr Reed predicts unemployment “will go up significantly” and warned the jobless rate could top 15pc.