RUTH SUNDERLAND: Furlough scheme needs to be extended and made more flexible, but it is not a long-term answer
The clamour is growing for the Government to extend and improve its furlough scheme, which is subsidising the wages of around four million people. Quite right.
Rishi Sunak, the Chancellor, has shown himself ready to listen over business loans and will no doubt do the same for job protection.
He needs to roll out the scheme for longer in order to avoid a ‘cliff edge’ resulting in a huge wave of redundancies.
It makes no sense to spend vast sums of taxpayers’ money – the Office for Budget Responsibility estimates the gross cost of furlough at £49 billion – only for many of those people to lose their jobs later on. Coming out of lockdown will be a process.
Business will not be anything like ‘normal’ for some time and the furlough must reflect that.
Decision time: Rishi Sunak has shown himself ready to listen over business loans and will no doubt do the same for job protection
There is certainly no chance of companies being back to the status quo ante by the end of June, when furlough is scheduled to finish. If that date is not pushed out, some companies will start announcing redundancy plans in the middle of this month to comply with the 45-day consultation period for laying off more than 100 employees.
Furlough also needs to be made more flexible, to accommodate short-time working, as is the case of places like Germany.
Many firms will want staff to come back on shorter hours at first and build up gradually. Social distancing and safety measures are likely to be in place until the health threat recedes.
For many businesses, this means dramatically different practices, as we are already experiencing in the supermarkets.
Fashion retailers, which will have a mountain of unsold stock, will have to limit the use of changing rooms and control the numbers in shops. They will have to consider what clothes people will buy in a post-corona world.
Airlines face the disappearance of packed planes and cheap and easy mass travel. Instead there will be long waits to board, health checks, much more cleaning, quarantining and fewer passengers on planes.
How much of the pub and restaurant trade remains viable with far fewer patrons is an obvious but uncomfortable question.
The jobs market, which was strong before the virus, is likely to emerge looking dramatically different. Much of the informal gig economy will be hard hit.
Security will be a bigger priority for a lot of people: jobs in the public sector are likely to be perceived as safer and will therefore become more popular.
The rapid growth in people working beyond retirement age may well go into reverse: several employers I have spoken to have raised the issue of older workers who may have to self-isolate for long periods.
At the other end of the generational scale, young people are having to delay their entry into the world of work. Even when the economy starts to re-awaken, they will face an incredibly difficult start to their careers.
Realisation of just how catastrophic the pandemic is for the economy has been slow to seep in. Sadly, large parts of the economy will not be quick to bounce back.
Furlough is a great idea but it was only ever meant to be a bridge to tide employers over a short-term loss of trade.
Yes, it needs to be extended and made more flexible, but it is not a long-term answer. Realistically, however much we might hope not, a wave of redundancies seems inevitable.
The consolation is that new jobs are being created in supermarkets, logistics, health care and call centres. Over time, adversity unleashes creativity and new sources of employment will emerge. But the ‘jobs miracle’ of the past few years is another casualty of this destructive virus.