Up to three million jobs will still be on life-support from the
“furlough” scheme when it ends in October, yet two-thirds of
these jobs would be sustainable in the long term, according to
new research published today by IPPR.
The think tank argues that the government should replace
the Job Retention Scheme with a new scheme, to avoid mass
redundancies. Unlike the current scheme, it would encourage
businesses to keep their employees in work rather than
“furloughing” them, as in countries like Germany, France and
Denmark.
It finds that this could save up to two million jobs
which would be viable if support was extended into the new
year, and which may otherwise be lost – which would cause
long-lasting damage to the economy and to people’s lives.
IPPR’s report also finds that one million of the
jobs currently supported by the scheme may never return,
largely concentrated in retail, hospitality, manufacturing,
business administration and support and construction.
IPPR urges reform of the welfare system to better support
people affected until they can find new jobs.
In its briefing paper, Rescue and recovery: Covid-19,
jobs and income security, IPPR proposes a new
Coronavirus Work-Sharing Scheme (CWSS) to pick up
where the current scheme ends, and run until March 2021. It would
not keep people in unproductive jobs as it would only be targeted
only at jobs and businesses likely to be sustainable.
Because fewer people would need the scheme and it would be
more targeted, the CWSS would cost less - possibly as little as a
fifth of the monthly costs of the current Job Retention Scheme,
at £7.9bn over five months. The minimum
cost of spending on Universal Credit for the same
newly-unemployed people over the same period would be
£1.5bn.
IPPR calls for measures to address the risk of temporary
local lockdowns or a second wave. Affected businesses and their
employees should automatically be given emergency access to the
Coronavirus Work-Sharing Scheme, it says.
The report also calls for the government
to:
-
Significantly scale up job creation and support
reallocation of workers. This should involve investing
an additional £30 billion a year in sustainable
infrastructure, as well as health and social care reform.
Firms should be required to take on apprenticeships as a
requirement of receiving contracts through this investment.
(See notes for more details)
-
Support incomes with a sweeping overhaul of
Universal Credit including maintaining the £20 a week
emergency increase beyond next April; removing the two-child
limit, the benefit cap and the savings limit which prevents
many self-employed people from claiming; and increasing the
payment rate per child.
-
Extend the ban on no-fault evictions,
currently due to end next weekend, leaving tens of thousands
of people who rent from private landlords vulnerable to being
forced from their homes.
Clare McNeil, IPPR associate director for work and
the welfare state, said:
“The Chancellor has said he will never accept
unemployment as an unavoidable outcome. But by ending the Job
Retention Scheme too early, and with no plan for protecting jobs
in local lockdowns or a second wave, that is precisely what is
happening. Up to two million jobs could be lost, not because
business owners are not working hard or smart enough, but because
of continuing social distancing measures.
“In many cases years of experience and dedication may
be lost with those jobs, and we know that the disabled, those who
are shielding and those with caring responsibilities -
particularly women - are most at risk.
“A new more targeted Coronavirus Work Sharing Scheme is
needed, that would run until early spring when official forecasts
suggest economic conditions will have begun to
improve.
"And just as importantly the government must do more to
kickstart the economic recovery, through large-scale public
investment to support the creation of new jobs and helping many
workers in the difficult task of switching sectors. To prevent a
growing debt and destitution crisis it must extend the ban on
evictions and go further to protect incomes through our neglected
social security system.”
Carsten Jung, IPPR’s senior economist,
said:
“The early end of the furlough scheme will mean cutting
support for jobs while the economy is only beginning to gather
speed. Hitting the brakes at this time is counterproductive, as
it pushes people into unemployment when their jobs could be
saved.
“Our proposed scheme would provide people and
businesses with an important lifeline until the economic recovery
has taken hold. And it could in fact pay for itself, as it keeps
people in work, helps support incomes both now and in the future,
and so would sustain the economy’s productive
capacity.
“The part-time work subsidy could make a real
difference as it pays for businesses to keep more workers on and
share the work between them, until the economy has
recovered.”
ENDS
NOTES TO EDITORS
1. The IPPR briefing paper, Rescue and recovery:
Covid-19, jobs and income security by Clare McNeil, Carsten
Jung and Dean Hochlaf will be published at 0001 on Sunday August
16. It will be available for download at: http://www.ippr.org/research/publications/rescue-and-recovery
