“Redundancy Day” Looms large for Travel Companies.

The end of Furlough is looming large and unless the Government announces a major job retention scheme in the next two weeks, at the beginning of October millions of people will be given one month’s notice to ensure the Government effectively subsidises notice periods with furlough pay and employers only have to pay statutory redundancy.

I fully accept that the Government does not have bottomless coffers and support the end of a “furlough” scheme, which effectively incentives staff to stay at home. However, for sectors like travel, which have been put on hold by Covid-19 for the foreseeable future, a scheme to allow employers to keep staff on their books until a rebound is essential.

Why not take the average cost of unemployment benefit and pay it to employers as long as they also contribute to top up staff salaries? To avoid abuse and the advent of artificially subsided wages, only staff currently on furlough should be considered for such a scheme, as it needs to be about retaining jobs and not creating new cheap labour for employers.

The % amount of a salary this represents will obviously vary between employee, but it is likely to be only 60% plus for lower-paid staff. However, I know plenty of travel agents who would love the opportunity to stay in the industry during this downturn, if they could get paid a sensible amount more than sitting on the dole.  

Some staff may be able to get better-paid work elsewhere, but post-November if nothing is done, many more will remain unemployed and unproductive.

When it comes to senior staff the subsidisation maths simply does not work and many employers are now faced with a second wave or redundancies where nobody is safe.

Senior staff who seemed indispensable at the start of Covid-19 are now expensive liabilities that many businesses can no longer afford. Too many businesses have got rid of the doers and are now far to top-heavy with managers.

As an industry, we have to face that fact that “Quarantine Fear” will cause January sales to be 40-50% of last years if we are lucky and an upturn will only come, when and if, two-stage airport Covid-19 is recognised by the Government as an alternative to 14-day Quarantine.

Many businesses if they are to survive, need to go into an even deeper hibernation in order to retain enough cash to survive until an upturn hopefully comes next summer, but also plan for a scenario where it does come for a further 18 months.

Firms need to follow the example of innovators like John and Irene Hays, who have secured lucrative Government contracts to operate Covid-19 testing hotlines and track/trace calls. Those contracts may now be tied up but turning your expensive staff into part-time consultants for non-travel sectors is a possibility, particular regards IT programmers and senior customer service managers used to driving efficiency in large call centres.

Also consider noncash mergers with rivals to combine overheads and customer bases or as a last resort a “pre-packing” the business to save as many jobs as possible, if you’re facing the precipice of bankruptcy.

It’s time for tough decisions and I know from personal experience that writing a blog is a lot easier than having to take the actions required.

I can only wish all of today’s industry leaders the best of luck, during these torrid times

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