Aerospace and automotive sectors need job retention scheme extension, Make UK says

The job retention scheme must be extended for critical, strategic industrial sectors or risk the loss of key skills in the economic recovery from Covid-19.

The call was made by Make UK on the back of its latest Manufacturing Monitor tracking survey that shows strong support for the measure from industry, with over 62% of companies either agreeing or strongly agreeing with the proposal. Just under 14% of companies surveyed disagreed with the proposal.

Furthermore, 22.8% of companies said they disagreed with the government’s decision to end the scheme and that it should be extended to critical sectors, while 17% said it should be extended to any business.

25.9% said it should be continued should there be further lockdowns or a second wave while 17.9% said the scheme should end but another support scheme should be put in its place.

Make UK also believes an extension to the scheme may help avoid a second wave of redundancies which the survey shows are in the pipeline.

42.4% of companies asked said that they have already made redundancies while 30.2% said they intend to in the next six months with 35.6% saying they may do.

In particular, Make UK believes that the aerospace and automotive sectors are those most in need of an extension. These sectors are at the cutting edge of technologies which will be vital to growth sectors of the future employing many highly skilled, well paid people across the UK.

New analysis of official data by Make UK backs this up with the two sectors being the largest investors in R&D, accounting for more than two thirds of the total spend (36.4%). This is worth £5.9 billion to the UK economy.

The sectors are also among the hardest hit by the pandemic with many job losses already announced and output in the automotive and aerospace sectors forecast to fall by 33% (£4.6 billion loss in value) and 14% (£1.1 billion loss) respectively.

Make UK added that similar schemes in Belgium and Germany have already been extended to the end of the year and the end of 2021 respectively, while the Australian Government has also announced an extension to their JobKeeper Payment until March next year. France has also introduced a new long-term short-time work scheme for agreement between employers and unions in specific sectors where collective agreement can be obtained. This has been created for companies facing a lasting drop in their activity and sits atop the ordinary short-time work scheme which will be still available.

Commenting, Make UK chief executive, Stephen Phipson, said: “The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running. Ensuring that those sectors which are at the forefront of technology and will provide the growth sectors and high skill jobs in recovery should receive the greatest support possible.

“The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest. Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so.”

The survey does provide some encouraging signs in line with other recent economic indicators of an improvement in business conditions. Almost a fifth of companies are now at full operating levels (17.6%) while a further 28% are operating between three quarters and full capacity. Looking forward over a quarter (27%) expect to be at full capacity at the start of 2021 while a further third (35.4%) expect to be between three quarters and full capacity.

The number of companies who expect a return to normal trading conditions of 12 months or longer has dropped for the first time. Having been on a steadily upward trend from 16% since April to reach a peak of 42% in the last survey, the figure has now dropped to 36.7%.

While Make UK cautioned that this is still more than double the level in the first tracker it hopes that it may be the start of a more encouraging trend downwards.

The survey covered 226 companies between 24 August and 1 September

Make UK www.makeuk.org