‘INSTEAD of driving us off a furlough cliff edge later this year, the government should provide continued support for employers,’ the GMB union said yesterday as the Tory government began winding down its furlough scheme.
Yesterday, the government reduced the contribution it makes to the Coronavirus Job Retention Scheme (CJRS) and the employers’ contribution increased. 2.4 million people still rely on the scheme for their income, the latest HMRC figures show.
Over the next three months, firms will have to shoulder more of the costs of the scheme as the government starts to wind down its support. Staff will continue to receive 80% of their wages, but employers will pay part of that for the first time. When the furlough scheme ends, bosses are expected to engage in mass sackings, with as many as 11 million predicted to be unemployed across the UK.
The furlough measures are being phased out completely by the end of September.
Gary Smith, GMB General Secretary, said: ‘Ending the furlough scheme too quickly could kill a recovery before it even starts.
‘Ministers’ “open-mindedness” over an extension to the job retention scheme needs to become a reality.
‘The government should provide continued support for employers that need it – especially in those sectors that have been hammered by the pandemic.
‘Our recovery is a process, not an event.
‘Ministers are seriously misguided if they think we can suddenly revert to business as usual.’
In fact, new Resolution Foundation research published yesterday finds that close to two-in-three older workers (aged 55-64) who were unemployed or fully furloughed during May have remained ‘parked’ in that position throughout the recovery.
As a result, over 600,000 workers aged 45-64 have now been unemployed or fully furloughed for at least six months.
These workers who remain on furlough now face a higher risk of unemployment in the coming months, with the Job Retention Scheme starting to be phased out.
Karl Handscomb, senior economist at the Resolution Foundation said: ‘Not everyone is back working. Over one in four older workers who were furloughed during the recent lockdown have remained parked on furlough during the reopening, and now face a higher risk of unemployment as the scheme starts to be unwound.’
Meanwhile the Institute for Fiscal Studies (IFS) warned the extra costs will lead to tens of thousands of workers suffering a steep fall in income as employers react by making redundancies.
Workers who live with higher earners will be unable to claim benefits and could see their income drop to zero should they lose their job.
Families with children could lose as much as a third of their income if they are forced to rely on universal credit, the thinktank said.
‘It will mean big income losses for many of those who end up unemployed unless they are swiftly able to find alternative employment,’ the IFS said.
The drop will be even larger should the government press ahead with a £20-a-week cut in universal credit, as planned in September, the report added.