Rishi Sunak grilled on National Living Wage
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Furlough numbers dropped to their lowest levels recently, as HM Treasury released data on furlough claiming figures up until the end of June. This data showed the fewest number of people are on furlough since the scheme launched in early 2020, down from a peak of nearly nine million at the height of the pandemic in May last year.
Rishi Sunak welcomed this news, commenting: “It’s fantastic to see businesses across the UK open, employees returning to work and the numbers of furloughed jobs falling to their lowest levels since the scheme began.
“I’m proud our Plan for Jobs is working and our support will continue in the months ahead.”
However, despite this positivity, new research has found a number of furloughed jobs are likely to struggle come the autumn.
According to analysis released today by the New Economics Foundation (NEF), 660,000 furloughed jobs are likely to still need the scheme when it ends in September.
Rishi Sunak has been urged to extend the furlough scheme (Image: GETTY/PA IMAGES )
NEF detailed once furlough is no longer an option, these jobs could be at-risk of becoming redundant or seeing a reduction in hours or pay.
The organisation’s modelling found hundreds of thousands of people could be pushed into unemployment unless the Government rolls back the increase in employer contributions and extends the furlough scheme.
NEF explained this is partly because the additional 20 percent employer contribution towards furlough wages from the start of August will not be cost-effective for around one-third of furloughed jobs (around 250,000).
As a result of this, NEF recommended the Government extend the scheme and redesign it as a new, permanent, short time working scheme for employers to furlough employees in response to future shocks from events such as climate disruption, trade realignment and future public health emergencies.
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NEF expanded on this: “Previous analysis using a NEF model, that the Treasury adopted for their own policy costings last October, estimated that between two and three million jobs would have been at risk of unemployment, loss of hours, or loss of pay at the end of April, had the furlough scheme not been extended.
“Today’s modelling used both a macroeconomic forecast based on gross domestic product (GDP) levels and an epidemiological forecast based on levels of social mixing and mobility after the end of lockdown on 19 July. NEF produced a core estimate of 660,000 jobs still requiring the furlough scheme in September, but demand could range from 450,000 to 1.1million jobs.
“Despite the removal of most pandemic restrictions on July 19, the economy is unlikely to return to pre-pandemic levels of activity for some time. At the end of June, 1.5million jobs were still on the furlough scheme, according to the Office for National Statistics (ONS).
“Self-isolation is still a requirement for those in close contact with a Covid-infected person. While this will no longer be a requirement for double-vaccinated people from August 16, at current rates around 10 million adults will not have received both jabs by this date.
The furlough scheme will end in September (Image: EXPRESS)
“Due to international travel restrictions, at the end of June one third of aviation workers in passenger air transport were still furloughed, according to the ONS. ONS data also shows that in June, 15 percent of the arts, entertainment and recreation workforce, and 11 percent of the transportation workforce, were still furloughed.
“In addition some changes, such as less people travelling by plane, may become permanent shifts in behaviour. This suggests that the Government’s September deadline for the furlough scheme is premature.”
Specifically, to avoid a surge in unemployment driven by the ending of the furlough scheme, NEF recommended the Government:
- Roll back the increase in employer contributions and extend the furlough scheme until a realistic point where voluntary social distancing is likely to end, which can be responsive to future events.
- Establish a new, permanent replacement scheme which would allow struggling firms to furlough their workers in response to future economic shocks such as climate disruption, changes in trade and future public health emergencies. This would build resilience in the UK economy and bring the UK in line with other European nations.
- Allow furloughed workers to use their subsidised non-working hours on training, with a priority for industries that may never recover to pre-pandemic levels of output. This would make furloughed workers more attractive for their employers to bring back, and would increase both productivity and the Government’s tax return.
Alax Chapman, a senior researcher at the New Economics Foundation, concluded: “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers across the UK, by risking unemployment or facing a reduction in pay.
“Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the delta variant.
“The furlough scheme has been a necessary lifeline for millions of workers, and we strongly urge the Chancellor to retain it beyond September.
“Over time, similar to some of our European neighbours, a more permanent furlough scheme should be introduced that can help the British workforce build resiliency against future economic shocks such as climate disruption, trade realignment and other public health emergencies.”