New data reveals that almost half of UK businesses (42%) have less than 6 months of cash reserves as a result of lockdown restrictions, contributing to a more than 50% decline in job vacancies between March and May 2020.
The personal finance experts at money.co.uk have analysed the data** and discovered that smaller businesses (1-9 employees) have suffered the biggest blow, resulting in a dramatic drop (36.6%) in available vacancies. This is closely followed by small-medium sized companies (10-49 employees), who have seen a similar slowdown in vacancies (36.1% decrease).
Large firms (2,500+ people) have suffered a smaller drop in vacancies (13.0%), although the figure is dramatically higher than any UK overall percentage drop since 2009 (13.7%).
Joel Kempson, personal finance expert at money.co.uk, said: “With half of small businesses predicted to default on the UK Government’s bounceback loan scheme, it’s no surprise that their job vacancy levels have seen the biggest drop.
“Figures released today reveal that 62% of UK SMEs have said that their turnover has been negatively impacted by lockdown. With consistent cash flow being vital for so many small businesses to function, hiring new staff will be almost impossible.”
February-April 2020 saw a dramatic drop in job vacancies across many industries YoY, with the hardest hit being:
Accommodation and Food Services (down 41.5%)
Transport and Storage (down 34.5%)
Information and Communication (down 34.5%)
Joel Kempson, added: “The hospitality industry has faced very troubling times as a result of COVID-19. As a sector that employs 3.2 million people across the UK, the devastating impact of the lockdown and social distancing restrictions is a huge cause for concern.
“In these uncertain times, those within the Accommodation and Food Services sector have a long way to go until figures revert back to normal. Following the recent announcement of a 14-day quarantine period for travellers from overseas, such businesses are set to experience further financial strains as we move into the traditional peak time for many hotels and restaurants.”
Alternatively, sectors who have been less severely affected by vacancy shortages are:
Real Estate Services (down 0.8%)
Public Administration and Defence (down 2.3%)
Mining and Quarrying (down 6.7%)
Almost half (45%) of the UK businesses that have paused trading are still uncertain as to when they will reopen. Data has revealed that of businesses that have paused trading, 77% of Accommodation and Food Services businesses and 93% in the Arts and Entertainment sector claimed in May that they were not expecting to reopen in the next 4 weeks.
There is a glimmer of hope for job hunters, as a quarter (25%) of businesses that had paused as a result of the coronavirus reported they expect to start trading again by the end of June.
Joel Kempson, concluded: “The decline of the jobs market is a great worry to both those currently unemployed and anyone working in the industries hit hardest by the COVID-19 crisis.
“Recent figures highlight that 89% of small business owners are feeling the financial pressure of COVID-19. However, there may still be financial help available in the form of UK Government-backed loans and other support based on your firm’s circumstances. It is vital business owners assess all options available to them to understand if they are still eligible for grants or loans.”
Money.co.uk has outlined the guidance for firms looking to go back to work as lock down has been lifted, with guidance on additional financial help for employers: https://www.money.co.uk/guides/coronavirus-employer-back-to-work-guide#financial-help-for-employers
Note to editors:“42% of businesses that have less than six months cash reserves” refers to : "42% of businesses responding to the Business Impact of Coronavirus (COVID-19) Survey (BICS) who had less than six months of cash reserves". Related to businesses that have not permanently stopped trading.