Unemployment figures are set to soar next month as the Government’s furlough scheme comes to an end.
Analysts have warned over 660,000 will still be in need of furlough.
Despite urgings from The New Economics Foundation to “roll back the increase in employer contributions” and extend the furlough scheme beyond September it is still currently set to be scrapped.
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According to the Treasury, more than 1.1 million people were still on the scheme last week, reports the Mirror.
The additional 20% employer contribution towards furlough wages from August 1 “will not be cost-effective” for about 250,000 posts, warns the NEF.
It fears “these jobs could be at-risk of becoming redundant or seeing a reduction in hours or pay”.
NEF senior researcher Alex Chapman said: “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers across the UK, by risking unemployment or facing a reduction in pay.
“Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the Delta (Indian) variant.
“The furlough scheme has been a necessary lifeline for millions of workers, and we strongly urge the Chancellor to retain it beyond September.
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“Over time, similar to some of our European neighbours, a more permanent furlough scheme should be introduced that can help the British workforce build resiliency against future economic shocks such as climate disruption, trade realignment and other public health emergencies.”
Shadow Chief Secretary to the Treasury Bridget Phillipson said: “This report lays bare the Government’s failure to think ahead and secure a proper recovery in sectors which have taken a lasting hit from the pandemic.
“In many sectors — from aviation to nightclubs — business isn’t back to normal but the Government’s sink or swim attitude is putting jobs and livelihoods at risk.”
A Government spokesman said: “We deliberately went long with our support to provide certainty to people and businesses over the summer and that support, which is a substantial amount of funding, is continuing.
“The furlough scheme has already protected 11.6m jobs and is in place until the end of September.
“Eligible businesses in the tourism industry will also continue to benefit from a reduced rate of VAT until March 2022 and businesses can also continue to access other support including our Recovery Loan scheme.”
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