Responding to the latest official employment figures, showing
hours and vacancies fell, while productivity also decreased, Tej
Parikh, Chief Economist at the Institute of Directors, said:
“Even before lockdown, coronavirus was threatening to take the
shine off the UK’s sterling jobs record, and initial estimates
for April don’t make for easy reading. It’s clear that without
the Government’s furlough scheme, the picture would have rapidly
deteriorated even further.
“While furloughing is holding off some job losses for now, it’s
not yet clear how firms will react as the scheme changes in
August and as social distancing continues. Many companies will
still be in the middle of a cashflow crisis, and will struggle
with any cost increases. Government faces an onerous task in
winding down the scheme without causing too much pain.
“The UK’s dire productivity record is one thing that can’t be put
down to the pandemic. In fact, many businesses have been
innovating more than ever in response to the lockdown. As firms
get up and running again, money will be tight, and widespread
debt will hold back new projects. The Government should seek to
spur investment through tax incentives, otherwise companies will
be slower to adapt to the new normal, and our productivity
performance will remain in the doldrums.”
