The Full Monty

The coronavirus crisis has had a severe impact on the country’s health, but also its economy and the labour market with it. With activity across parts of the economy heavily restricted, the Job Retention Scheme saved millions of jobs, firms and incomes. But as the country moves from lockdown into a new, reopening phase of this crisis, the challenge for policy makers is set to get harder. Economic activity will continue to be affected by the virus until there is a vaccine or effective treatment. But the Job Retention Scheme is being withdrawn. Without further support for the hardest-hit sectors, there is a risk of significant redundancies in the summer/autumn, adding to already high unemployment.

Policy makers should act now to minimise outflows from the hard-hit sectors – a wage subsidy scheme or a National Insurance cut in those sectors would reduce labour costs and discourage redundancies. Alongside this, the Government must pursue radical action to create jobs across the country, such as in social care and housing retrofitting, and ramp up support for the unemployed.