Around 660,000 jobs will likely still need furlough when the scheme ends in September with thousands being pushed into unemployment if the government doesn’t extend it past the deadline
The analysis from the New Economics Foundation (NEF) found that the additional 20% employer contributions towards furlough wages at the start of August will not be cost-effective for nearly 250,000, jobs.
The thinktank detailed that once furlough is no longer an option, workers could be at risk of becoming redundant or seeing a reduction in hours or pay.
The New Economics Foundation states that the government’s September deadline is premature as certain industries will not be able to trade at full capacity when furlough ends.
An example of this is the aviation industry which at the end of June had one third of workers still on furlough and international travel will not return to normal come the deadline and there is possibility of a permanent shift occurring.
Alex Chapman, senior researcher at the New Economics Foundation, said: ‘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.’
The analysis also highlights that self-isolation is still a requirement for those in close contact with a Covid-19 infected person and even with the requirements for isolating easing from 16 August for those who are double-vaccinated, at the current rate around 10m adults will have not received both jabs by this date.
In order to avoid a surge in unemployment at the end of furlough New Economics Foundation recommends that the government rolls back the increase of employer contributions and extends the furlough scheme until a realistic point where voluntary social distancing is likely to end.
It also calls for the government to 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.
