On Friday, the Chancellor made an announcement outlining the changes to the Job Retention Scheme.
This phased wind-down of the scheme is welcome. It has sounded the starting gun of a great effort to ensure the UK avoids a tsunami of job losses between now and October, when the scheme ends.
As a country, we need to preserve as many jobs as we can; help people transition from furlough back into employment; and support those who have lost their jobs back into work as quickly as possible. Businesses should look closely at the flexible furlough option, which will help them integrate people back into work effectively.
The Job Retention Scheme was a welcome economic lifeline during lockdown, but the government paying 80 per cent of salaries while people stay home is clearly not sustainable. Extending until August and then gradually reducing government contributions across all sectors is the right call. This buys some time to begin to rebalance the economy and to ensure people have the right skills.
I have previously warned of a ‘day of reckoning’ when furlough comes to an end. And we must now take urgent action because this day is fast approaching. The country is vulnerable to unemployment rising to 5 million people (15% of the workforce), levels not seen since the Great Depression of the 1930s.
To prevent this, businesses should come together and create innovative solutions to preserve jobs and protect livelihoods. This is one of the main reasons why REED, along with other businesses and industry leaders, launched the Keep Britain Working campaign.
Support needs to be offered to those groups of people who are hardest hit, like young people, single working parents and people with disabilities. There have to be options for up-skilling and retraining these groups to help them rapidly adapt to the changing job market. Now would be an ideal time to look at greater flexibility in the apprenticeship levy which could unlock millions of pounds to allow short-term accredited training that would help individuals and businesses reskill. Guaranteed apprenticeships for young people would also provide hope and avoid a “lost generation”.
We must also protect small businesses, the lifeblood of the UK’s economy and job market. Talent exchanges would allow valuable workers to move between companies and to help them thrive and grow.
Furlough is one of the most welcome – but costly – policies the government has implemented in my lifetime. The months ahead will reveal whether the scheme has simply delayed mass unemployment or succeeded in protecting huge numbers of jobs. Clearly, it does have to come to an end and the Chancellor is now pushed into a high stakes game of economic Jenga with jobs and livelihoods the key building blocks.
If we get this wrong, the coming months have the potential to consign an entire generation to a lifetime of debt, poverty and austerity. This is a game the Chancellor must win through collaboration with business and the development of clever ideas and initiatives that will help the nation lift itself from this recession.”