After running up huge debts and losing money on big contracts, it is predicted the government will have to prop up the Carillion to ensure worker’s jobs safety as well as public sector projects the company were working on will be completed.
David Lidington, Minister for the Cabinet Office, explained that current staff working on public sector projects will get paid. However, that might not stop them worrying about their short-to-medium term job security.
Lidington said: “All employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.”
Carillion Chairman Philip Green said it was a “very sad day” for the company’s workers.
To compound the issues, any immediate threat to worker’s jobs isn’t the only problem employees face.
The Carillion pension funds have a current deficit of £600m, where thousands of current and former employees have money. The Pension Protection Fund (PPF) said it was aware news of the liquidation would “raise serious concerns for all people involved”.
Russ Mould, Investment director at AJ Bell, told the I: “Carilion did not take the precaution [of having a cash buffer] and it has been hobbled by a huge pension deficit with disastrous consequences.”
Furthermore, with Carillion providing infrastructure work for Network Rail, Mick Cash, the General Secretary of the Rail, Maritime and Transport (RMT) union, said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain.”
As many small and medium sized company’s supply to Carillion, there is a worry that the knock-on effect will also threaten the safety of jobs at suppliers who work with Carillion.
According to the Confederation of small business (FSB), this is likely to be the case.
“I wrote to Carillion back in July last year to express concern after hearing from FSB members that the company was making small suppliers wait 120 days to be paid,” said FSB National Chairman Mike Cherry. “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees.”
Unfortunately, Carillion aren’t the major firm facing internal financial pressures that have lead to worries of, or actual, large-scale redundancies.