The Job Retention Scheme is helping millions of workers. As the crisis lifts, can it be wound down in a way which protects them?by Jonathan Portes and Tony Wilson / May 4, 2020 / Leave a comment
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where-“ said Alice … “so long as I get SOMEWHERE”
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”
In too many ways, the last month has often felt like we have disappeared down the rabbit hole. We wanted to find our way out, with only vague directions beyond to simply keep on walking. But as time passes, a route out of this crisis has started to become clearer—and this week will see the government begin to set out how and when it envisions the lockdown ending. Rightly, the focus will be on how we begin to ease restrictions while protecting public health. But we also need to plan now, and plan well, for how we will exit from the emergency measures that over the last month have staved off an economic disaster.
There can be little doubt that the government’s actions—and the Job Retention Scheme (JRS) in particular—did indeed do just that. If you want to know how bad things could have been, look at the US, where last week we saw another four million people file for unemployment, bringing total claims to 30m and probably pushing the unemployment rate above 20 per cent. By contrast, in the UK, while claims for Universal Credit have soared by 1.4m, they only represent perhaps 4 per cent of the workforce; far more—five to seven million people—will benefit from the JRS.
So in the UK, as in most European countries, the state stepped in to subsidise employment rather than unemployment. But if you add the five to seven million on the JRS to the three million likely benefiting from self-employment support and a further five million claiming out-of-work benefits, then all in all we estimate that around one third of the potential workforce is now not working and receiving government financial support, directly or indirectly. The welfare state has rarely felt so big, or so diverse.
The case for this extraordinary expansion was both economic and social. Without the JRS, firms would have been forced to sack millions of people; as well as the personal hardship this would…