The number of furloughed workers fell by a quarter between its early May peak and the end of June, but the Job Retention Scheme (JRS) is still supporting millions of workers.
The news comes as average employer contributions ramp up to 15 per cent of pre-furloughed wage costs next month.
the Resolution Foundation said in response to the latest JRS data from HMRC.
The latest figures show that the number of furloughed workers peaked at 8.9 million in early May, before falling to 6.8 million by the end of June. Resolution Foundation analysis, based on separate ONS data, suggests that the number of fully furloughed workers continued to fall sharply in July and August, as the economy continued to reopen and partial furloughing was introduced.
The data also highlights the stark sectoral nature of the UK’s employment shock, with social sectors such as hospitality hardest hit. The Foundation notes that 96 per cent of firms in beverage serving activities (such as pubs) have made use of the JRS, compared to just 9 per cent non-specialised retail stores (such as supermarkets).
The Foundation is calling on the Chancellor to consider the unique sectoral nature of the UK’s employment shock, rather than continue with the plan to fully end the JRS for all sectors at the end of October.
It says that rather than end the JRS altogether, or maintain it in its current form after October, the Chancellor should focus the scheme on hardest-hit sectors – such as hospitality and leisure – and flip it so that the scheme subsides the wages of workers returning to work, rather than staying off work.
Today’s HMRC data comes as separate ONS data showed that the cost of the JRS fell from £8.2 billion in June to £6.9 billion in July.
Nye Cominetti, Senior Economist at the Resolution Foundation, said:
“The Job Retention Scheme has played a critical role in protecting firms and workers from the worst of the economic crisis, with almost nine million workers furloughed at its peak in early May.
“The good news is that the number of fully furloughed workers has fallen substantially since early May as the economy has gradually reopened.
“However the fact that 6.8 million workers were still furloughed at the end of June, with hard-hit sectors such as hospitality still operating well below capacity, highlights the scale of redundancy risks workers face as the Job Retention Scheme is wound down by the end of October.
“The immediate priority for the Chancellor should be to bring forward further targeted support to these sectors. Otherwise, the significant policy success of the retention scheme will be followed by a big post-furloughing unemployment spike this Autumn.”
