NIESR calls for furlough scheme to be kept open

29 Jul 2020

The National Institute of Economic and Social Research (NIESR) has called for the government to keep the Coronavirus Job Retention Scheme (CJRS) open for longer.

The CJRS is being wound down after helping support 11 million people through the crisis, and will come to an end in October.

The NIESR predicts that unemployment in the UK could rise to 10% of the workforce by the end of 2020. It is predicted to subsequently recede as the economic recovery gathers speed in 2021. According to the NIESR, the rate of unemployment would have stayed lower had the government extended the CJRS beyond the end of October.

In the Summer Economic Update, the Chancellor said furloughing had been the right measure to protect jobs through the first phase of the COVID-19 crisis and that it will be followed by a Job Retention Bonus. This will see UK employers receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021. 

'The planned closure of the furlough scheme seems to be a mistake, motivated by an understandable desire to limit spending,' said Garry Young, Deputy Director at the NIESR.

'The scheme has been an undeniable success in terms of keeping furloughed employees attached to their jobs. The incentives offered to employers by the Job Retention Bonus look too small to be effective given the uncertainty about the economic outlook – a one-off payment of £1,000 per employee compared to an average wage of £530 per week.'