As new figures reveal that unemployment is continuing to rise, Rishi Sunak’s decision to withdraw furlough in one fell swoop is a historic mistake that risks worsening the jobs crisis.
This month, the government began to reduce its contribution to furloughed staffs’ wages. Whereas previously the government had paid 80% of wages, this has been reduced to 70%, with employers expected to make up the difference. As of next month, the government’s contribution will be reduced again to 60% and, at the end of October, the furlough scheme will end completely.
The latest data from ONS suggests that 1 in 10 workers are still furloughed, but in some sectors this is as high as 41%.
When furlough ends, the UK government is offering businesses a Job Retention Bonus of £1,000 for every furloughed employee kept on until at least the end of January. However, MPs on the Treasury Select Committee and Robert Chote, head of the OBR, have said that the money will mostly be spent on employees who were going to be kept on anyway.
It’s is a poorly targeted scheme that sounds like it has been made up on the hoof.
Even with furlough scheme currently in place, figures for August show that the number of jobcentre claimants in Sheffield has continued to rise. Last month, 23,495 people in Sheffield were out of work and claiming work-related benefits – an increase of 345 from July. On 12 March, just before lockdown began, the figure stood at 11,865.
Across the UK as a whole, the number of claimants has more than doubled since March, increasing from 1,275,575 to 2,737,945. In South Yorkshire, the figure rose from 31,045 claimants to 59,655.
Trade unions and businesses alike have warned the government that withdrawing the furlough scheme will exacerbate these job losses. The Trade Union Congress (TUC) has urged the government to extend the furlough scheme to avoid a “tsunami of job losses”, while the Confederation of British Industries (CBI) has said a replacement scheme is needed to prevent a “cliff edge”.
If we’re to avoid mass unemployment then the government needs to change course before it’s too late and target its support at industries that are most in need.
This isn’t about supporting ‘unviable’ businesses indefinitely. Pubs, beauty salons, restaurants aren’t legally able to operate at full capacity and so of course they aren’t currently viable. The government must step in to help those sectors that have been hardest hit by lockdown.