Labour Market

Furlough extension will keep many people in artificial “employment,” says IEA expert


In the Media

Christopher Snowdon writes for the Morning Advertiser

In the Media

Professor Len Shacketon quoted in The Times

In response to the extension of the furlough scheme until the end of March, IEA Editorial and Research Fellow Professor Len Shackleton said:

“The renewal of the full furlough scheme means another large addition to government borrowing and increases the likelihood of damaging tax increases in a recession. It means that we will still be keeping substantial numbers of people in artificial ’employment’ when there is little prospect of their being able to return to work in their pre-pandemic job. Of the 2 million still in furlough at the end of October, it has been estimated that about 400,000 will eventually lose their jobs. 

“This new furloughing will inevitably increase the numbers of those with no real job to return to, as more and more businesses cut back on planned employment or give up the struggle entirely.

“It might be better in the long run to give a lump sum or enhanced Universal Credit to workers in this difficult position, to support them while they search for new employment, rather than extending the period of suspended animation. There are vacancies: in mid-October online job ads were up to 70 per cent of the corresponding period last year, and already 40 per cent of those who lost jobs over the summer had obtained new ones. The sooner people are redeployed, the better.

Ultimately, the extension of the furlough scheme represents a major defeat for the Chancellor, who had little choice but to acquiesce to the lockdown and a further hit to output and employment. The extension also suggests that the Chancellor has little confidence that we will emerge from lockdown as scheduled at the beginning of December.

“It is disturbing that there is as yet no published analysis of the likely costs of the renewed restrictions, either in monetary terms or in terms of the knock-on costs of higher mortality from non-Covid causes, delays to NHS treatment, and higher levels of mental illness.”


Notes to Editors

For media enquiries please contact Annabel Denham, Director of Communications, 07540770774

Professor Len Shackleton is available for further comment.

For further IEA reading on furlough and the labour market:

How to create new jobs 

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.