Hundreds of thousands of jobs could be put “at risk” when the Government’s furlough scheme ends in September, an independent think tank has warned.
Research by the New Economics Foundation (NEF) said workers spent approximately 6.4 billion hours on the Job Retention Scheme in 2020 and are predicted to spend 3.3 billion more on the scheme in 2021.
According to analysis from NEF, once the furlough scheme ends, a further 850,000 jobs could be put at risk of becoming redundant or seeing a reduction in hours or pay.
Its research also suggests that between two and three million jobs could have been at risk had the furlough scheme not been extended.
In July, as part of the tapering of the scheme, employers will be asked to contribute 10% to unworked hours, then 20% in August and September. The NEF said in order to avoid a “surge” in unemployment in the autumn, it was calling on the Government to:
reduce the employer contribution over summer, which it said would make the furlough scheme more cost effective for more businesses;
extend furlough beyond September and integrate a training offer into a future scheme – prioritised for industries that may struggle to reach pre-pandemic levels of output.
Alex Chapman, senior researcher at the NEF, said: “The UK economy is undergoing structural change, some prolonged pandemic impacts are unavoidable, but so too are automation, and the zero-carbon transition.
“Through these crises there is a cast-iron case for a longer-term job support scheme, encouraging employers to keep workers in at least partial employment, while skilling them for the jobs and industries of the future.”
The latest Business Impact of Covid-19 Survey from the Office for National Statistics suggests 32% of businesses (weighted by turnover) have less than three months of cash reserves, and 8% have less than one month.
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“This means that if the end of the furlough schemes turns out to be premature in terms of the rate of economic recovery, businesses will have very little capacity to keep workers on their books until business activity fully returns,” added the NEF.
An HM Treasury spokesperson said: “Throughout the pandemic, we have supported families across the country – paying their wages through the furlough scheme which has kept millions in employment and ensured they have jobs to return to.
“Our plan for jobs will continue to support families and businesses during the next stage of our economic recovery – through initiatives like our Restart and Kickstart schemes, spreading hope and opportunity across the UK.”