Will the Job Retention Bonus save the anticipated 1 million CJRS-related job losses?

In research by YouGov in June 2020, employers disclosed the likelihood of their need to make redundancies after the ending of the CJRS. The research concluded that half (51%) of all businesses knew that they would have to let some workers go if there was a cliff edge ending at the end of October 2020. Based on these predictions, the Resolution Foundations calculated that this would result in more than 1 million redundancies.

The Resolution Foundation is also skeptical about whether the newly announced Job Retention Bonus (JRB), which will reward employers who still have previously furloughed workers in post at the end of January 2021, is generous and targeted enough to prevent layoffs. Using Understanding Society data, the organisation calculated that:

  • The median annual wage of a furloughed works is £16k;
  • For this worker’s employer, the CJRS will cover 82% (July), 73% (Aug), 64% (Sept) and 55% (Oct) of wage costs;
  • The JRB covers only 21% of costs.

In conclusion, the Resolution Foundation believes that:

  • With 9.4m people potentially entitling their employer to a JRB, the ‘deadweight” in the scheme will be large, as most participants will have been brought back anyway.
  • The scheme will benefit firms who were heavy users of the CJRS but are able to reopen at scale.
  • At best, it may create an incentive to retain a furloughed employee over one not furloughed during lockdown.

 

 

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