A QUARTER of firms using the government’s job-retention scheme will struggle to contribute to furloughed workers' salaries from August, a study has revealed.

The scheme, which pays 80 per cent of the wages up to £2,500 per month of workers laid off because of coronaviris, is to be extended until October – but employers have been told they must start 25 per cent of the cost of the scheme from August.

In a poll of almost 700 company directors using the scheme, about half said that they could provide 20 per cent or more towards furloughed workers’ full-time salaries between August and October.

But one in four could not afford any amount, the Institute of Directors (IoD) says in a report to be published today.

More than a third of those using the scheme said they would bring most of their furloughed workers back part-time if it was allowed.

The IoD called for as much flexibility as possible in the system in a bid to protect jobs.

IoD director general Jonathan Geldart said that while the scheme was protecting millions of jobs, many firms would be forced to make difficult decisions by August.

“The government must soften the blow by introducing as much flexibility as possible into the furlough system,” he said. 

“The more flexible the scheme is, the better firms can recover and the fewer jobs will rely on state subsidy.

“With the prospect of job losses and businesses struggling to create new roles in the months ahead, the spotlight will be on our training system. Businesses are eager to work collaboratively with government to lift skills across the board.”