Unemployment 'could soar as result of coronavirus crisis'

There could be a “massive rise” in Scotland’s jobless total as a result of the coronavirus pandemic, MSPs have been warned.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said its latest tracker research, from last week, found 43% of businesses “did not have confidence that they are actually going to survive this crisis”.

She told MSPs on Holyrood’s economy committee that even when guidance on returning to work is published, some firms are “not certain if they will return to the markets”.

Ms Cameron warned: “Even with the job retention scheme, I unfortunately think there is going to be a massive rise in unemployment when we begin to look at the capacity issues.”

The UK Government has picked up 80% of the wage bill for staff who are not able to work due to the pandemic.

Tracy Black, the director of CBI Scotland, said some firms may only be able to operate at 60% of the capacity they did before the outbreak – questioning if that would make it viable for them to continue.

She told MSPs: “Because social distancing is probably going to be with us for a long, long time, the harsh reality is even if you go to shift work, night shifts, change your production lines, the reality is it unlikely certainly in manufacturing you will be able to get up to full capacity.

“Talking to some of our members, they reckon they will be probably operating at around 60% – at best they might get up to 80%.

“For many companies that just isn’t a viable proposition any more, particularly if you work in those industries that have very tight margins, like automotive and aerospace.”

She said this is a “real concern” and “tailored support for different sectors that will take time to recover” will need to be put in place.

Susan Love, policy manager at the Federation of Small Businesses in Scotland, said its survey of around 800 small businesses suggested about half of businesses in Scotland have closed as a result of the crisis.

Of those that have closed, more than a third worry about whether they will ever reopen again.

When it comes to easing lockdown restrictions on companies, CBI Scotland said it will “strongly urge” the Scottish Government to look at recent guidance produced by UK ministers.

The Scottish Government has established working groups in 14 different sectors of the economy to look at how businesses can get back to work safely.

Ms Black said: “Many firms work across multiple environments so it is quite hard to fit them into that sector approach.

“For example, a construction company will have offices, it might be working outdoors, indoors, in vehicles.

“Large retailers will have offices, manufacturing, warehouses, stores, delivery staff.”

She added: “In England, they produced clear stated goals for when businesses can reopen, we have seen the same in Ireland we have seen the same in Norway.

“These timelines can absolutely be flexible and they of course must be set by the science and medical community.

“But they give a clear outline to business, because they can’t just restart overnight, they need to get their supply chain back in place, they need to get their staff brained up on social distancing measures and they need to look at their cash flow.

“This is where this unified approach is absolutely critical.”