The Job Retention Scheme is in the process of winding down and the number of people being laid off is rising.What’s striking, however, is how many of those who were furloughed have successfully managed to return to their jobs.
The number of people reporting to be "temporarily away from work" fell by 4,000,000 between the start of lockdown and July.
The headline rate of unemployment has inched up to 4.1% - well below peak in the last recession (8.5%) well below the OBR’s most optimistic guess (9.7%) at where it will be later in the autumn.
In the three months ending in July, redundancies increased at their fastest pace since 2009 but they remain well below the levels we saw during the financial crisis.In August, companies were asked to start contributing to the costs of furlough.
According to the Office for National Statistics, in the same months the number of people on company payrolls fell by just 35,958 to 28.3 million.
The evidence so far suggests that the Job Retention Scheme has been working in precisely the way it was designed to but the hardest years lie ahead.
Furlough support ends next month and the expectation is that job losses will surge.At its peak, 9,000,000 people were furloughed, today just under 3,000,000 are still having their wages subsidised by the taxpayer.The British Chambers of Commerce said one third of its members expect to let people go and the Institute for Employment Studies said close to half a million redundancy notices have been sent out since July.
Pantheon Economics points out that Google searches for "redundancy" hit a record high and predicts September will be a grim month.
The chancellor is under enormous pressure either to extend furlough support or come up with something to replace it.We should recognise what a difficult decision this is.
The pandemic has delivered an economic shock which is temporarily but of an unknowable length.
Patterns of behaviour have changed (1 in 4 employees continue to work from home, full time) in some cases perhaps permanently.Clearly it is desirable to prevent unnecessary jobs losses but it doesn’t make sense to spend taxpayers money preserving jobs which have no permanent future.A recovery is underway but you can’t even begin to argue that the aviation, hospitality, entertainment and retail industries are back to normal.
It would be remarkable if the Treasury isn’t looking at additional support for the beleaguered.For the moment, Rishi Sunak continues to trumpet his Job’s Retention Bonus as proof that the cavalry charge hasn’t ended. £1,000 will be handed out to firms for every employee recalled from furlough and retained until the end of January.The design fault seems obvious, some companies will be rewarded for doing what they would have done anyway. Even HMRC concedes there are better ways of spending £9 billion but the Treasury continues to believe in its effectiveness.
There are 700,000 more people out of work than there were at the beginning of this year.
The young have been hardest hit. There has been a record fall in the number of 18-24 year olds in employment, they urgently need helping back into a workplace that is still being reshaped by the pandemic.The number of vacancies in the economy has been increasing since June but opportunities remain limited.
Online, there are around half of the number of advertised jobs that there were a year ago.
Competition for work is ferocious.