When furlough has to stop - next steps to avert long-term unemployment


The scale of the jobs challenge is clear: data shows that claimant unemployment has already increased by 1.6 million in just two months, and our research estimates that around 10 million workers remain at risk of unemployment. Even without a second wave of the virus, the unemployment rate is forecast to hit double figures this year.

Our analysis also found that local authorities with a higher proportion of furloughed employments are already more likely to have a higher proportion of their population claiming benefits. As the furlough scheme is wound down, and if a comprehensive programme of employment and skills support is not put in place, pre-existing inequalities will be further exacerbated.

Unemployment comes at a high cost, both to individuals and the economy, and this recession is unique for its sectoral nature, meaning a large number of workers will need not only need to find new jobs, but to retrain and switch careers.

We are therefore calling on the Government to put in place a comprehensive and ambitious package of support to avert the worst employment crisis since the Great Depression.

We propose:

  1. A Universal Support Offer to help as many at-risk workers as possible into learning, career planning, or job searching. This should provide online support and one-to-one careers advice, as well as extending current entitlements to free learning up to level three qualifications, for all adults.
  2. A requirement that companies placing furloughed staff at risk of redundancy immediately inform HMRC in order that rapid support can be offered to those workers.
  3. An Into Work Service to help those who need to switch jobs, and an additional 10,000 work coaches to help meet demand for back to work support.
  4. A package of support for workers needing to change careers, including enhanced career advice, a £5,000 learning account for accredited training, and sector-based Ambition programmes and apprenticeships to bring together businesses and workers.
  5. A time-limited, means-tested Career Changer Grant of up to £3,000, or a Career Changer Premium in Universal Credit, to mitigate wage drops as people move sectors. To incentivise businesses to hire apprentices and career changers, and to pay living wages, the Government should also allow firms to use a proportion of their apprenticeship levy to support wages, with an equivalent grant for SMEs.

In total the proposed package could cost £3.2 billion – or 5 per cent of what the Coronavirus Jobs Retention Scheme is expected to cost. We cannot afford to delay. It is already more than three months since the start of lockdown. As discussed above, waiting for furloughed workers to become unemployed before support is offered risks damaging the recovery and scarring a generation of workers.