Debenhams will slash 2,500 store and warehouse jobs to cut costs

Debenhams will slash 2,500 store and warehouse jobs to cut costs after sales plummeted during lockdown – as UK suffers biggest employment slump in a decade

  • Department store Debenhams to axe 2,500 roles in an attempt to cut its costs 
  • Some 730,000 fewer people were employed last month compared to March
  • ONS found the number on payroll fell another 114,000 between June and July 

Debenhams is to axe 2,500 jobs across its stores and warehouses in an attempt to cut costs after sales plummeted during the coronavirus lockdown.

The department store is scrapping the roles of sales manager, visual merchandise manager and selling support manager as part of a management restructuring process.

The move, which was first reported by RetailWeek, comes four months after Debenhams collapsed into administration.

Debenhams said it has no plans to shut more stores as part of the restructure, having closed seven after announcing administration. 

It comes as shocking new data revealed that the number of people on company payrolls in the UK has fallen by 730,000 since lockdown –  the biggest drop in employment a decade.

Dire figures have started to show the huge impact of coronavirus on the labour market, with a wave of jobs being axed.

In the three months to June, the number in work decreased by 220,000 – the largest quarterly slump since 2009. Total hours worked slumped by a fifth over the quarter to the lowest level since 1994.

Debenhams has axed 2,500 jobs across its stores and warehouses to costs after sales plummeted during lockdown

It comes four months after Debenhams collapsed into administration, thought it says it will not be closing any stores

Meanwhile, the numbers on payroll tumbled another 114,000 in July, as the claimant count – which includes some people who are in work – increased again to reach 2.7million. 

Underlining the misery, Debenhams announced it is cutting 2,500 roles. 

A Debenhams spokesman said: ‘We have successfully reopened 124 stores, post-lockdown, and these are currently trading ahead of management expectations.

‘At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations.

Biggest fall in employment for a decade as impact of Covid is felt 

Employment saw the biggest fall in a decade in the three months to June as coronavirus hit.

Official figures showed the number in work decreased by 220,000 – the largest quarterly decrease since 2009. 

The 0.2 per cent drop comes after a long period after the credit crunch in which employment levels have hit repeated highs. 

The employment figures are still up 0.3 per cent year on year. And unemployment stayed flat, as the government’s support schemes and a rise in inactivity masked the true effects of lockdown.

Workers aged under 24 and those over 50 were the worst hit by the fall.   

The total hours worked slumped by a fifth over the quarter to the lowest level since 1994. 

‘Those colleagues affected by redundancy have been informed and we are very grateful to them for their service and commitment to Debenhams.

‘Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.’

Analysts have warned the grim news is the tip of the iceberg, as the full effects of lockdown have so far been masked by the government’s massive support schemes. 

The latest figures today showed that 9.6million jobs have been furloughed, with the Treasury paying out £33.8billion in subisidies. 

Many people appear to have chosen to stay economically ‘inactive’ rather than hunt for work – meaning they remain outside the headline unemployment figures.

Figures released tomorrow are due to confirm that the UK has formally entered a recession – with a second consecutive quarter of GDP contracting.  

ONS economist Jonathan Athow said: ‘The labour market continues recent trends, with a fall in employment and significantly reduced hours of work as many people are furloughed. 

‘Figures from our main survey show there has been a rise in people without a job and not looking for one, though wanting to work. 

‘In addition, there are still a large number of people who say they are working no hours and getting zero pay.

‘The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs.

Some 730,000 fewer people are now on the payroll than in March before the country went into lockdown to combat the killer disease

The latest ONS figures showed the average number of hours worked per week has stayed flat overall – although there was a slight bump for the self-employed

Job vacancies showed slight signs of recovery in July – but are still far lower than during the credit crunch

Latest figures show that 9.6million jobs have been covered by the government’s furlough scheme since the crisis began

‘Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed.’  

The ONS said that around 7.5million people were temporarily away from work in June this year, most of them on the Government’s furlough scheme.

Some 9.6million jobs have been furloughed costing £33.8billion  

Some 9.6million jobs have been propped up by the government’s furlough scheme during the coronavirus crisis, figures showed today.

Treasury data showed the scale of the support being given by the state, with 1.2million firms putting in claims worth £33.8billion since March.

Another 2.7million claims have been filed for self-employed grants, totalling £7.8billion.  

Around three million of these had been away for three months or more.

Some 300,000 people in the UK were away from work because of the pandemic but getting no pay last month. However, that figure had been over half a million in April and May.

Redundancies were up by 27,000 quarter on quarter to 134,000, in another sign of what is to come. 

The claimant count – which includes people receiving in-work benefits – increased by 94,400 to 2.7million last month. It is up 117 per cent, or 1.4 million, since March. 

Total weekly hours worked in the UK decreased by a record 191.3million, or 18.4 per cent, in the quarter to June compared to the previous three months.

It was the largest quarterly decrease since estimates began in 1971, with total hours hitting the lowest level since 1994. 

Chancellor of the Exchequer Rishi Sunak said of the latest figures: ‘Today’s labour market stats make it clear that our unprecedented support measures, including the furlough and self-employed support schemes, are working to safeguard millions of jobs and livelihoods that could otherwise have been lost.

‘I’ve always been clear that we can’t protect every job, but through our Plan For Jobs we have a clear plan to protect, support and create jobs to ensure that nobody is left without hope.’

Fears are mounting of a ‘bonfire of jobs’ amid warnings a third of firms are planning to lay off staff this autumn.

Many of the cuts are set to come from hospitality businesses such as hotels, restaurants and cafes, as well as shops that were already on the brink before the pandemic.

The Bank of England predicted last week that unemployment will rise by a million by the end of the year. 

Labour has been demanding the government ditches plans to scrap the furlough scheme entirely from October, forcing employers to take on the full costs of staff wages again. 

Shadow work and pensions secretary Jonathan Reynolds said: ‘Labour has repeatedly warned the Government their one-size-fits-all approach will lead to job losses. These figures confirm what we feared – Britain is in the midst of a jobs crisis.

‘It is extremely worrying that this increase in unemployment has hit older workers, the self-employed and part-time workers hardest.

‘The Government must wake up to the scale of this crisis and put an end to this jobs crisis, and adopt a more flexible approach targeted at the sectors who need it most.’

Debenhams to axe 2,500 jobs 

Debenhams is cutting 2,500 jobs as the high street bloodbath continues.

A spokesman for the store chain said its trading was ‘ahead of expectations’ and had successfully reopened 124 stores post-lockdown.

‘At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations,’ the spokesman said.

‘Those colleagues affected by redundancy have been informed and we are very grateful to them for their service and commitment to Debenhams.

‘Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.’

Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, said: ‘Preventing falling levels of employment turning into a surge in poverty must be a national priority.’

Federation of Small Businesses national chairman Mike Cherry said: ‘The success of the job retention scheme has kept our employment figures healthy over the past few months but reality is now starting to hit home.

‘As our economy unlocks, many thousands of people will be looking for work over the next year. That’s why a focus on job creation – not just retention – is so critical.

‘In light of today’s figures, the future of the job retention scheme will need to be reviewed closely. The option of a meaningful extension to the furloughing initiative should be kept open, especially now local lockdowns are a fact of life and a meaningful second spike in coronavirus infections is possible.’

Yael Selfin, chief economist at KPMG UK, said: ‘As the Job Retention Scheme unwinds, we expect unemployment to rise quickly in the fourth quarter. That could see unemployment average over 6 per cent this year compared to only 3.9 per cent at present.

‘Government needs to step in and help those who are likely to lose their job retrain for new openings in different sectors. It is an opportunity to upskill a large section of the UK labour market, providing better prospects for the future.’ 

The Bank of England’s latest forecast says the economy will shrink by 9.5 per cent this year, making it the worst downturn in a century. 

GDP figures due to be released this week are set to show that the UK has entered a technical recession – with two consecutive quarters of contraction. The Bank of England predicts that the downturn will be the worst in a hundred years (chart pictured)

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