29 June, 2020 Open access
29 June, 2020 Open access
New report also recommends payroll tax cuts to encourage employers outside hardest-hit sectors to take on those unemployed as result of COVID-19 economic shock
The boldness of the Coronavirus Job Retention Scheme (CJRS) must be followed by equally bold wage subsidy measures to protect jobs in the next, more challenging, phase of the jobs crisis, the Resolution Foundation has said.
In a new report published today, The Full Monty: Facing up to the challenge of the coronavirus labour market crisis, the Foundation notes that the government took bold action to save millions of jobs when it introduced the CJRS, but warns that while the scheme has so far prevented mass unemployment -
‘… the labour market shock can be seen playing out in other indicators. Employment fell by 430,000 in April, economic inactivity is rising, the claimant count measure of unemployment has hit levels last seen in the early 1990s, and vacancies have fallen by more than half. The total number of hours worked across the economy fell by almost 9 per cent between January-March and February-April – its fastest decline on record – capturing the combined impact of job losses, furloughing, and cuts to hours for those still in work.’
Examining the key novel features of the shock caused by the pandemic, the Foundation highlights that -
As a result, the Foundation says this recession is unlike any we have experienced and calls for further policy decisions to confront the job losses to come, making key recommendations that include -
Commenting on the report, Senior Economist at the Resolution Foundation Nye Cominetti said -
‘Britain is slowly emerging from the lockdown that brought the economy to a halt and sent employment tumbling. But we are a long way off returning to business as usual, and its jobs crisis is far from over.
A second wave of unemployment later this year, following the phasing out of the Job Retention Scheme, could leave Britain with the highest unemployment levels in a generation. The government should adopt a ‘Full Monty’ policy response to avoid this.
This should include a Job Protection Scheme to maintain employment in hardest-hit sectors, and the biggest ever peacetime job creation programme. Major public investment in social care and retro-fitting homes could both spur job creation, and help meet the challenges of an ageing population and climate change.
The success of the Job Retention Scheme in protecting family incomes has shown why it pays to be bold with policy decisions. That same ambition is needed in the next phase of the crisis.’