Firms should continue to receive state support to pay wages when furloughed staff return to work as the lockdown eases, a public services reform think-tank has said.
The UK should follow the example of other countries including France, Germany and Canada and allow furloughed staff to work some hours as businesses begin reopening, Reform said.
More than four million workers have been furloughed under the Coronavirus Job Retention Scheme, with the taxpayer covering 80% of the wages of staff, up to £2,500 a month.
But the scheme does not allow furloughed staff to work and Reform warned that firms will face the prospect of a “cliff edge” with a sudden stop to state support as they reopen, even if full-time working is not possible.
The report’s co-author, Aidan Shilson-Thomas, said the scheme has served its primary purpose of preventing a “catastrophic wave of redundancies”, but, as the economy reopens, the state should top up the wages of workers on reduced hours.
He added: “As it stands, the policy may not be flexible enough to meet the needs of employers as the economy slowly begins to restart.
“Ministers must allow short-time working so employers have the flexibility to bring staff back to work in a gradual fashion while still receiving some support, once the lockdown begins to be lifted.”
A Treasury spokesman said: “We’ve taken unprecedented action to get through this economic emergency and our support package is one of the most comprehensive and generous in the world.
“Around half a million employers have already applied to our Coronavirus Job Retention Scheme to pay the wages of over four million furloughed jobs – jobs that might otherwise have been lost.
“We are also helping businesses through our other measures including a number of loan schemes for businesses of all sizes, income tax deferrals and small business grants.
“We will take into account the wider context of the lockdown, the public health response and the longer-term economic recovery when taking any decision on how and when to close the scheme.”
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