The corona virus job retention system needs to be extended and reformed by three months to prevent a “second wave” of unemployment and to support a gradual return to work, according to a leading think tank.
The Learning and Work Institute report notes that the program has successfully contributed to job loss and income protection. Although it was costly – at around £ 14 billion a month – failure to act would have resulted in a far greater increase in unemployment and permanent damage to the economy. This would have meant an additional bill for unemployment benefits of up to £ 5 billion a month, a deeper recession due to lower household spending and a slower recovery due to more business failure and the “scars” effects of long-term unemployment.
The Coronavirus Jobs Retention Scheme (CJRS) was set up to protect jobs and income during the crisis. It covers the cost of 80% of paid workers’ wages up to a maximum of £ 2,500 per month. The program, which is set to run until the end of June, has employed over 800,000 employers employing around 6 million people. The report notes that one in five adults is either on leave or unemployed.
As the government plans to announce a relaxation of the ban, the chancellor has put increasing pressure on some sides to end the CJRS. However, the report warns that social detachment is expected to continue for at least the rest of the year, and that the crisis will lead to potentially permanent changes in consumer behavior, that the economic recovery is likely to be gradual and will vary from sector to sector. Some companies will not be able to operate before the crisis or not open at all. In this context, a quick withdrawal of support can lead to a “second wave” of unemployment if support is withdrawn quickly.
The report urges the Chancellor to:
- Extend the CJRS for three months until the end of September;
- CJRS reform to allow briefly Working timegive employers the opportunity to gradually support employees;
- Plan to gradually withdraw the CJRS Collaborate with companies and unions from September;
- Make support dependent beyond September about obligations regarding minimum standards for payment and job quality – such as payment of living wages – or about the state taking over a share of the shares in order to recover some of the costs.
This would reduce the cost of the CJRS to an estimated £ 7 billion a month. in the absence of the system, only slightly higher than the cost of unemployment benefits.
Regardless of how long the CJRS continues, it is likely that hundreds of thousands of workers on leave in a completely different economy will not be able to return to work after the crisis. The report therefore calls for a Vacation support program for workerswith personalized advice and guidance, retraining grants, a job guarantee to prevent long-term unemployment and a further increase in universal credit to strengthen the safety net.
Stephen Evans, executive director of the Learning and Work Institute, said;
“The Corona Virus Job Retention Scheme has successfully limited the effects of the virus on jobs and income and has put us in a better place to recover from this crisis.
“Although it cannot continue indefinitely, a sudden withdrawal of support can lead to a second wave of unemployment. The Chancellor should extend the program by three months, reform it to support a gradual return to work, and a gradual one Plan to withdraw support in the fall.
“The post-crisis economy will be very diverse, and we need to recognize that hundreds of thousands of workers on leave may never be able to return to work. So we have to be ready to support these workers through investment in skills, job security and a more generous safety net. “
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