Around one-in-seven arts, leisure and hospitality employees remained on furlough after grand reopening in May – despite widespread reports of staff shortages

Overall furlough rates dropped to their lowest level since the start of the pandemic in late May, but a significant proportion of employees remain out of work even as firms report staff shortages, and the Government prepares to start phasing out the Job Retention Scheme (JRS) in just two weeks’ time, the Resolution Foundation said today (Thursday) in response to the latest ONS data.

The Foundation notes that furlough rates have fallen rapidly in recent months – from 20 per cent in late January to just 7 per cent at the end of May. However, around 1.7 million employees remain on partial or full furlough, and they are increasingly concentrated in a few key sectors of the economy.

Furlough rates in late May were still 21 per cent in arts, entertainment and recreation, and 14 per cent in hospitality and transport.

The Foundation notes that with no significant further reopening due before the JRS starts to be phased out in two weeks’ time, there remains a huge challenge in getting these employees back to work – either to their previous job, or into new ones. More positively, for the first time the majority of these employees were only partially furloughed, and therefore doing at least some of their previous working hours.

It adds that in mid-May, the combination of furloughed employees and the fall in employees and self-employed workers since the start of the pandemic means that the UK still has a ‘Covid employment gap’ of around 2.8 million to close.

Charlie McCurdy, Economist at the Resolution Foundation, said:

“The reopening of the economy has brought about a welcome, and rapid, fall in the number of furloughed workers, which is now at its lowest level since the start of the crisis.

“But while firms say they are struggling to recruit staff, around one-in-seven employees across the arts, leisure and hospitality sectors were still on furlough even after the grand reopening on 17 May.

“The Government faces a huge challenge in closing the UK’s ‘Covid employment gap’ before emergency support is ended after the Summer in order to prevent a damaging rise in unemployment later this year.”