A Third of UK’s Furloughed Employees Back to Work in The First Two Weeks of July

The government’s much-famed pandemic stimulus measure, the furloughing scheme is nearing to an end in two months’ time now, at the end of October. The scheme which was perhaps the most dynamic stimulus measure rolled out by any country to deal with the pandemic brought nearly 9 million British working-class people under its fold and protected their jobs, livelihoods and did not allow them to be displaced. However, now that the economy has been thrown open, it is important that more and more people are brought back to active working so that the cost of the scheme on the exchequer may be brought down quickly. It is to be noted here that as per Office Of Budget Responsibility (OBR) estimates, the cost of the furloughing scheme to the British economy would be around £60 billion for the March to October period if not partially or fully extended further. Thus the sooner more and more people are brought back out of the scheme, the cost of the scheme to the exchequer will not only come down but will also add to the government’s ability to extend the scheme to any specific industry which would need extended support. It is also to be remembered here that the government’s public debt levels are set to reach £370 billion by the end of this year, which is extremely high.

How the furloughing scheme aided the British economy during the COVID- 19 crisis

The furloughing scheme was Britain’s idea to protect thousands of small, medium, and large businesses in the country from going bankrupt and millions of jobs and livelihoods lost. When the pandemic first hit the country, it was immediately realised that revenue levels for most businesses would fall as a result of a smaller number of people wanting to come out of their houses for fear of the infection. However, when the lockdown was imposed in the country on 23 March 2020 almost all businesses were shut for an indefinite period. It was but obvious that businesses who were dependent more on their cash registers will be the worst hit by this lockdown and their employees would face an increased threat of unemployment than other industries. For any country, the small and mid-sized businesses are the backbone of its economy; hence the crumbling down of this segment of the economy could have long term disastrous consequences for the country.

Since the opening of the economy in May, several industries have been witnessing, a strong revival, only because of the lucid loan schemes and the furloughing scheme that were rolled out in March. The most important dimension of the furloughing scheme, however, was that the employment rate in the country was checked to a reasonable extent, though it is still quite high. These schemes though costing a lot to the British exchequer, have helped it avoid a much bigger financial disaster should businesses have failed because of the lockdown.

The disparity among different industries in bringing back employees from furlough

There is a wide disparity among different industries in terms of their state of recovery and the number of people they have been able to bring back from furlough. Though a third of the employees who had been under the benefit of the scheme has already come back, as an ONS survey published on 30 July puts it between the two weeks of 29 June and 12 July only 7 per cent people were brought back from furlough. The construction industry which saw the best recovery rates since the opening of the lockdown have nearly 17.1 per cent of its staff still in furlough, while for activities involving Water Supply Sewerage Waste Management And Remediation Activities about 91.1 per cent people are back in active work. Arts Entertainment and Recreation have seen the lowest number of people being called back from furlough at 33.6 per cent, while the overall figures for all industries taken together, about 77 per cent of the people have come back to work.

The continuing social distancing measures

The continuing social distancing measures being enforced in most workplaces and commercial establishments are proving to be the biggest impediment in rapidly bringing back people from furlough. Industries like Arts Entertainment, recreation, accommodation, and Food Service Activities which are still seeing a large number of people sitting outside has got a lot to do with the late opening of these industries as well as the enhanced safety measures recommended by the government specifically for them. It is likely though that these industries would see a greater number of people joining back in the next couple of weeks, but the situation overall will not come back to normal till all the restrictions are removed.

Conclusion

It is highly likely that the government might extend the furloughing scheme for some more time, especially for industries still having a large portion of their staff under active furlough. Industries like Airlines, other forms of public transport and recreation will take longer than usual to recover from this pandemic ordeal. In the meantime, it is also important that the government should consider withdrawing the scheme from industries who have shown good improvement and replace it with other measures that will help them sustain their momentum. It is very important to understand that furloughing scheme is not a panacea for all ailments if the scheme is extended for longer than it is required, it might even end up harming the industry itself.