People should be offered incentives to continue to work from home and furloughed or redundant workers should be asked to do valuable public investment work that will pay off later.
These are among conclusions of a new analysis of the economics of getting people back to work by researchers at the Institute for Fiscal Studies.
Providing incentives or subsidies for home working where it’s possible, since the benefits of some continuing to work at home will be felt by all (through lower virus transmission), not merely the firms or workers who do it.
Promoting changed commuting patterns. We are used to trying to encourage public transport use and discourage driving. This logic is temporarily reversed.
With high levels of unemployment likely, there is a stronger-than-usual case for employing furloughed or redundant workers to do valuable public investment work that will pay off later – if the government can identify areas where the private sector is not producing vacancies appropriate to unemployed workers’ skill-sets, and if it can plan the public investment wisely.
Government will find itself being lobbied for support by all sorts of firms and industries. It needs a clear and transparent framework for making decisions which favours growing and productive sectors and avoids propping up those which were already declining.
Robert Joyce, Deputy Director at IFS and an author of the report, said:
“The economy is in uncharted territory and steering a safe and prosperous path out of lockdown will be difficult. Some old principles applied to this new situation will be crucial. More than ever the government needs to mitigate uncertainty wherever possible, promote and share innovation and help smooth the matching of workers to jobs. It needs to adjust policy to incentivise newly desirable behaviours like home working and avoiding public transport at peak hours. And it needs a transparent and principled stance on supporting industry which will stop it falling victim to special pleading.”
