Of the 2 million viable jobs at risk this winter, just 230,000 are likely to be saved by the Job Support Scheme and Job Retention Bonus

New IPPR research calls for more targeted incentives for employers under both schemes to promote retention of more workers on a part-time basis

The Institute for Public Policy Research has estimated that only around 10 per cent of the 2 million viable jobs that are at risk this winter due to the economic impacts of the coronavirus (COVID-19) pandemic are likely to be saved as a result of the Job Support Scheme (JSS) and Job Retention Bonus (JRB).

In a new report, The Narrow Corridor, the IPPR examines the impact of the JSS - introduced in Chancellor Rishi Sunak’s Winter Economy Plan to replace the Coronavirus Job Retention Scheme (CJRS) from 1 November 2020 - and the JRB, in meeting their primary objective -

‘... to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.’

However, estimating that around 2 million viable jobs will still need government support when the CJRS closes at the end of this month, the IPPR finds that design flaws in the JRB - including the exclusion of workers on lower wages and its failure to make payments that incentivise employers to keep higher wage earners on a part-time basis - combined with the design of the JSS mean that only around 230,000 jobs are likely to be saved.

As a result, to prevent loss of an estimated 1.8 million jobs this winter, the IPPR recommends the government improves both schemes by -

• replacing the £1,000 lump sum JRB payment with one that is proportional to wages for hours worked part-time (up to a ceiling of £2,500) paid in monthly instalments aligned with the JSS up to April 2021;
• only providing the JRB to firms that qualify for the JSS so that it is better targeted to save jobs and more cost-effective than the current set up;
• using savings from the proposed JRB changes to increase the government contribution to hours not worked under the JSS by 10 per cent to 43 per cent; and
• monitoring whether the extension of the JSS for businesses forced to close due to local lockdown measures, announced on 9 October 2020, provides sufficient support to keep viable businesses trading.

Highlighting that its recommendations would help workers retain jobs where they earn wages outside the narrow range for which the current JRB scheme acts as an incentive to employers - describing the improved scheme as 'JRB+' - the IPPR says -

'Crucially, this is a design issue and not a question of overall funding. We estimate the JRB+ together jointly with the JSS would cost slightly less than the money set aside for the JRB.'

Finally, while acknowledging the extension of the JSS for firms forced to shut entirely due to strict lockdowns, the IPPR says this does not alter its estimates of job losses over the coming winter -

'This is a crucial measure to support areas most heavily affected. Though it will be important to monitor whether it indeed reaches all businesses hit by restrictions. This extension however does not change our overall estimate for jobs losses that will occur in the majority of firms that do continue trading.'

For more information, see The narrow corridor from ippr.org