There is the possibility that the furlough scheme may be extended in part, but it is unlikely that it will be extended in full. Even if an extension occurs the cost of the furlough will move towards the business owner or client, with only 40% being met by the Exchequer from October.
For FM, given that 80% of service provision involves people, the loss of the furlough will drive some dark behaviours across our industry, asking unpalatable questions of the FM teams and creating some tricky situations for the FM buyer, or client:
- Do we or don’t we resume service provision and if so to what level. There are a mix of views, but the stark reality is that the built environment cannot sustain the level of occupancy for which it was designed given social distancing. The questions is, ‘can business afford the same or greater level of service provision than last year to support fewer occupants?’. Stop and Think‘s view is that service resumption should be controlled at 70% (at most) of the cost of service pre Covid-19. This constitutes a real resource reduction in the supply chain and FM organisation.
- Is ongoing furlough sustainable given the increasing financial burden on employers for the job retention scheme. Is it viable for employers to continue with the furlough? For FM this could be a significant redundancy challenge.
- Who pays? Stop and Think asked the question in the last message, who picks up the
redundancy cost? If the resources were used elsewhere on Covid-19 activities, either brought back from, or not put on furlough by the supplier, then the likelihood is that the link to the client has been broken. The resources have been providing services outside of the contract and this means that any contractual commitments made by the client to the supplier regarding the underwriting of redundancy costs may no longer apply.
In reality, the FM organisation, operating model, and supply chain will need to be re-imagined and a blue print of “what good looks like” in the Covid-19 world needs to be prepared. The brutal truth is that FM focus must be proactively pursuing a reduction in cost, with the employment casualties that creates.