“The current end date for the furlough scheme can cause unnecessary harm to thousands of workers across the UK," says senior researcher.
A think tank has recommended that the furlough scheme should become permanent to protect employees from climate disruption, changes in trade and future public health emergencies.
Analysis from the New Economics Foundation (NEF) found that almost 700,000 people are at risk of losing their jobs or having hours or pay cut when the scheme ends in September.
Modelling from the think tank found that an estimated 660,000 jobs would still require the furlough scheme in September, but the number could be as high as 1.1 million.
This is partly due to the additional 20% employer contribution towards furlough wages from the start of August – which will not be cost-effective for around one third of furloughed jobs.
Alex Chapman, senior researcher at the NEF, said: “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers across the UK, by risking unemployment or facing a reduction in pay.
“Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the delta variant.”
According to government data, 1.5 million jobs were still on the furlough scheme at the end of June.
One third of aviation workers in passenger air transport were among those furloughed as well as 15% of the arts, entertainment and recreation workforce, and 11% of the transportation workforce, were still furloughed.
Despite the removal of most pandemic restrictions on 19th July, the economy is unlikely to return to pre-pandemic levels of activity for some time.
The NEF recommended that the government roll back the increase in employer contributions and extend the furlough scheme until voluntary social distancing ends.
The organisation also proposed launching a permanent scheme which would allow struggling firms to furlough their workers in response to future economic shocks.
Chapman said: “The furlough scheme has been a necessary lifeline for millions of workers, and we strongly urge the Chancellor to retain it beyond September.
“Over time, similar to some of our European neighbours, a more permanent furlough scheme should be introduced that can help the British workforce build resiliency against future economic shocks such as climate disruption, trade realignment and other public health emergencies.”
The Green Party also called for the scheme to be extended, and reiterated its call for a universal basic income.
Professor Catherine Rowett, Green Party work, employment and social security spokesperson, said the scheme had been a “vital lifeline” for workers and employers.
She said: “The government seems to be willing to throw the lives of millions into uncertainty, yet much of this anxiety and uncertainty could have been saved if a generous package of universal basic income had been introduced at the start of the pandemic, as a permanent measure to make sure that nobody is left high and dry.
“It would ensure that freelance workers are no worse off than those in regular employment, and that every single one of us has enough to meet our basic needs, to give us all a fairer chance of weathering this storm together.”
Alexandra Warren is a freelance journalist.
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