Furloughed workers three times more likely to fall into payment default

We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

Furloughed workers have been forced to reckon with changing financial circumstances brought about by the introduction of measures to stop the spread of COVID-19. In March, the government announced all but non-essential businesses would have to close in efforts to tackle the virus. To prevent mass unemployment as a result, the government introduced the Coronavirus Job Retention Scheme, otherwise known as furlough.

Under the assistance measure, the government covered 80 percent of the salaries of furloughed workers up to £2,500 a month.

But new research has revealed many are continuing to feel the financial strain of remaining in employment limbo.

A study by consumer magazine Which? showed furloughed workers are three times more likely to have defaulted on at least one payment in the last month when compared to other workers.

The study, which analysed 2,129 consumers, demonstrated the problems many are having to face as a result of the crisis. 

The organisation found that 13 percent of furloughed staff have defaulted on at least one payment, compared to four percent of those still working as normal.

Within this group, seven percent had defaulted on a bill, with six percent defaulting on a loan or credit card payment.

And the research showed significant monthly payments such as mortgages were also bearing the burden.

It stated five percent had defaulted on either a mortgage or rent payment due to financial difficulties.

DON’T MISS
Unemployment spike expected to be ‘short-lived’ across the UK [INSIGHT]
Furlough: The change this week which could affect pay and work [EXPLAINED]
Rishi Sunak accused of leaving furlough-excluded workers behind [ANALYSIS]

Many support measures such as payment holidays are set to come to a conclusion in October.

As a result, there have been fears expressed regarding the support many will be forced to lose in just a few months time. 

Richard Piggin, Head of External Affairs and Campaigns at Which? said: “It’s very worrying that people currently on the furlough scheme have reported experiencing much higher levels of financial difficulty than those who are working as normal.

“With just a couple of months until the scheme comes to an end, there is real concern that this gap could widen even further.”

The government has announced it will be winding down the furlough scheme, which is due to end in October.

Employers will be required to take on more financial responsibilities until the programme comes to a close.

However, the government has resisted calls to extend the scheme any further.

Commenting on the scheme, Chancellor Rishi Sunak stated it had been a lifeline for many Britons, but now was the correct time to bring it to a conclusion.

He said: “It cannot and should not go on forever. When furlough ends it will be a difficult moment. 

“The truth is, calling for endless extensions to the furlough is just as irresponsible as it would have been back in June to end the scheme overnight.

“We have to be honest. Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before.”

Prime Minister Boris Johnson concurred with these remarks, stating in an interview with the Evening Standard that after October, the government focus would move away from furlough and towards getting the economy moving again.

Source: Read Full Article