7 minute read
Skills
Retraining essential as one
in five firms consider job cuts
The British Chambers of Commerce (BCC) has called for the government to extend skills training as new research showed nearly one in five companies are considering staff redundancies as the next phase of furlough tapering begins.
With older workers much more likely to still be on furlough, there’s concern that they could go unutilised unless support for retraining is immediately put in place.
Carried out by BCC, the survey asked more than 250 businesses with employees still on furlough what their response might be to employers’ contributions to the scheme rising. Nearly one in five (18%) said they would make staff redundant.
The BCC survey comes after HMRC data showed older workers were far more likely to remain furloughed than younger ones, raising concerns about what plans are in place to re-skill those who are left without jobs as the scheme winds down – with skills shortages continuing to bite across the UK labour market.
Jane Gratton, head of people policy at the British Chambers of Commerce, said: “Recent changes to the furlough scheme is likely to result in many thousands of people being released back into the labour market, as employers who are still struggling to recover from the recession are forced to make redundancies and cuts to working hours.
“With widespread skills shortages across the economy, some will find new jobs where their skills are in demand, while others will need to retrain for opportunities in a different sector. “Whether furloughed workers are returning to the workplace or the wider labour market, it’s crucial that employers and the government give them the support and training they need to be re-engaged and productive. Alongside rapid retraining opportunities, the government should extend the Kickstart scheme into 2022 and expand it to enable older workers to gain new skills and experience.”
While some workers may need re-skilling or upskilling to re-enter the labour market, firms that are looking to grow their workforce are finding it hard to source suitably skilled staff.
A recent BCC survey showed that seven out of ten firms were having difficulty hiring the right talent for their business.
The sector with the highest proportion of firms reporting difficulties was construction at 82%, followed closely by hotels & catering at 76%. Of respondents in production & manufacturing, 68% reported difficulties in recruitment. Consumer services firms were the least likely to report difficulties but even in that sector the proportion facing issues was 61%.
Jane Gratton said: “As firms are released from lockdown restrictions, the skills and labour shortages they experienced before the pandemic are once again starting to bite. The encouraging increase in job creation across the manufacturing and services sectors is being held back by recruitment difficulties at all skill levels, jeopardising growth and productivity.
“Whether people have found work in a different sector, changed their working patterns or left the UK during the recession, firms are now struggling to find the people they need. It’s vital that business, government and the skills system work together to find solutions.
“Adopting more remote and flexible working patterns will help firms attract skills from a wider talent pool. But we also need access to rapid and agile training and reskilling opportunities for adults in the workforce, alongside a flexible and cost-effective immigration system that ensures fast access to skills when these can’t be recruited locally.”
Why using direct debits may add to your credit card bill
Credit cards are as ubiquitous in our daily lives as children begging to go to McDonald’s and there being a Marvel movie on at the cinema.
According to the Reserve Bank of Boston Survey of Consumer Payment Choice approximately 75 per cent of US consumers have a credit card, while in the UK the Office for National Statistics Wealth and Assets Survey found that 60 per cent had the plastic in their wallet.
It is a lucrative business for financial services firms. In the US the credit card industry accrues $600 million a month in late payment fees, according to OCC Credit Card Metrics. If you have debt on a credit card and have an outstanding balance, you must at least make a minimum payment each month, or you get charged a fee. The Financial Conduct Authority found that millions of people in the UK do pay the minimum each month. The concern is that repeatedly paying only the minimum is a precursor to joining the millions of people who either had their debt written off or were in arrears. This is bad, because missing payments and getting into arrears attracts fees and reduces your credit rating. The fees are pretty salient, but worse is the effect on your credit rating because of the knock on effect of an increased future cost of any borrowing. The good news is that missing payments and attracting fees does not always indicate financial hardship. We assessed data from 250,000 new card openings across five card issuers in the UK. This large data set allowed us to study human behaviour at scale. The data not only included all transactions people made over approximately 2.6 million card-months, but also particularly valuable insights into how consumers managed their card repayments. We could see that people were most likely to incur fees just after they had opened their account, with the risk of a fee dropping steeply over the first year or so of a new account. It looked like people new to credit cards were learning to remember to pay their credit card bill each month. But the story is more complicated. In fact, we found the reduction in fees over time was entirely attributable to people switching to direct debit repayments that automatically pay their bill each month without any need for them to intervene manually. Fees are almost completely eliminated after people set up a direct debit (as you now only receive a fee if you don’t have enough money in your current account). But if you don’t set up a direct debit, your risk of a fee remains at the same level over subsequent months. Without a direct debit, people don’t appear to have a ready mechanism to avoid incurring fees. So things are simple, right? You just need to set up a direct debit to avoid forgetting to pay your bill? Unfortunately not. There is a twist in the tale. Some people who set up a direct debit arrange what is called a minimum payment direct debit. This seems great, because you’ll automatically pay the minimum each month avoiding fees, and can pay more manually whenever you like, just as you did before. You have insured yourself against forgetting, but kept your options open on when you’d like to pay down the debt. The problem is, because people no longer have to pay their bill when it arrives, they just don’t get round to making these extra manual payments as often any more. This means they carry more debt from month-tomonth and have to pay interest on that debt. And it turns out that the extra interest paid is about 2-3 times more than the fees avoided! The moral of the tale? Well it’s complicated. Fees don’t mean people are in financial hardship. Some are, but many are just forgetting to pay their bill. If you forgot this month, you are just as likely to forget next month, unless you set up a direct debit. But if you set up a minimum payment direct debit, you’ll neglect to make larger payments and pay loads of interest. Perhaps, if you can, set up a direct debit for some fixed amount that is quite a bit larger than the minimum (ideally pay in full, but otherwise try to clear at least 10 per cent or more of the debt) and you get the best of both worlds. • This article was originally published on the
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