IPPR calls for a ‘Coronavirus Work Sharing Scheme’ to replace the CJRS, warning that three million jobs could be at risk wthout continued government support beyond October 2020

Action needed to preserve viable jobs in the short-term, particularly in the event of a second wave of the COVID-19 pandemic or further local lockdowns

Putting forward a proposal for a 'Coronavirus Work Sharing Scheme' (CWSS) to replace the current Coronavirus Job Retention Scheme (CJRS), the Institute for Public Policy Research (IPPR) has warned that the government must take action to preserve jobs until the recovery has taken hold.

Estimating that three million of the four and a half million jobs being supported by the CJRS may still need support beyond the scheduled end of the Scheme in October 2020 - particularly in the event of a second wave of the COVID-19 pandemic or further local lockdowns - the IPPR calls on the government to take action to preserve viable jobs in the short-term.

Outlining proposals for a CWSS which would encourage businesses to keep their employees in work rather than furloughing them, the IPPR says that key features of such a scheme are that it should - 

• subsidise non-working hours at 60 per cent, with the employer contributing an additional 20 per cent;
• introduce a part-time work subsidy of 10 per cent for all hours spent working - calculated to make part-time work attractive, in a scenario based on a 20 per cent demand shortfall;
• cap the joint subsidy for worked and non-worked hours at £2,500;
• only apply to businesses which are viable over the medium-long term; and
• be open to new firms and workers, and also those who are 'shielding' or who have caring responsibilities that have been increased by the crisis.

While acknowledging that around one million jobs could be lost permanently, the IPPR suggests that around two million jobs could nevertheless be saved if wage subsidies were to be extended into the new year, and it suggests that the estimated cost of a CWSS - at £7.9 billion - should be assessed in light of the costs of universal credit for newly unemployed people over the same period which would be a minimum of £1.5 billion without further government intervention to prevent unemployment.

Finding that the government's response to the unemployment crisis so far is not well calibrated to the prospect of the ongoing impacts of the virus or a deep recession, the IPPR says - 

'As we move into the next phase of the crisis, the government should adopt a twin approach of ‘rescue and recovery’. As well as firing up the economic recovery through large-scale investment in sustainable infrastructure and urgently needed public sector jobs, the government must continue to support jobs in the hardest hit sectors until the economic recovery takes hold, by extending and reforming its job retention scheme.'

NB - alongside its proposals to protect jobs, the IPPR also recommends that the government should - 

• maintain the emergency increase to universal credit, remove austerity-era measures such as the two-child limit and benefit cap, and increase the child element in universal credit and tax credits by at least £20 per week to support struggling family incomes; and
• go further to protect those living in the private rented sector, by extending the ban on evictions - currently due to expire on 23 August 2020 - for another six months.

For more information see Rescue and recovery: Covid-19, jobs and income security from ippr.org