More Than Half Of Furloughed Workers Have Already Returned To Work

According to analysis carried out by the Resolution Foundation, more than half of furloughed workers have already returned to work with their employers. This coincides with the fact that from the 1st August 2020, employers have had to start making a contribution towards the pay of furloughed workers

Background

Back in March 2020, the Government introduced the coronavirus job retention scheme, under which an employee is ‘furloughed‘. What this meant was that whilst the employee is not working, they remain on the company’s books, to be brought back when required. Moreover, under the scheme to begin with, the Government provided employers with a grant under which 80% of furloughed workers wages were paid, up to a maximum of £2,500.00 per employee per month.

The scheme is scheduled to end on the 31st October 2020, but employers are required to start sharing the costs from the 1st August 2020, to be phased in, in 3 stages, as follows:-

• From the 1st August 2020, the taxpayers contribution will remain at 80% of employees wages, but employers will be required to pay the national insurance and employers pension contributions of furloughed workers. On average, national insurance and employers pension contributions equate to approximately 5% of aggregate employment costs
• From the 1st September 2020, the taxpayers contribution will fall to 70% of employees wages, with the employers contribution set at 10% plus payment of national insurance and employers pension contributions
• The taxpayers contribution will fall to 60% from the 1st October 2020, with the employers contribution rising to 20% plus payment of national insurance and employers pension contributions

The furlough scheme was closed to new entrants from the 30th June 2020. 

Employers were able to start bringing furloughed workers back part-time from the 1st July 2020 (brought forward from the 1st August 2020). Should they do that, then the employer would need to pay their employee 100% of their wages for those hours that they do work, whilst the grant under the job retention scheme would cover the employee for the remainder of their contracted hours at the aforementioned furlough rates.

Furloughed Workers: More Than Half Returned To Work

Research conducted by the Resolution Foundation, and based upon 3 surveys published by the Office for National Statistics, has found that over half of furloughed workers have now returned to work. According to official figures however, 9.5 million people remain on furlough as at the 26th July 2020. However, according to the Resolution Foundation, the number of furloughed workers reached a peak of 8 million in late April 2020, and has now fallen below 4.5 million. The Resolution Foundations senior economist, Dan Tomlinson, states: "The Job Retention Scheme has supported around a third of the private sector workforce at some point since lockdown began, protecting family incomes and preventing catastrophic levels of unemployment. But with the number of furloughed workers having peaked in late April, it is misleading to say that nine million workers are currently furloughed. Over half of these workers have now returned to work as lockdown restrictions have eased. The true figure is below 4.5 million. But while furloughing is currently far less widespread than commonly claimed, there are still millions of employees without work, particularly in the hospitality and leisure sectors. These workers face a heightened risk of unemployment as the JRS starts to be phased out from today. The Chancellor should reduce this risk by phasing out support for these hardest hit sectors more slowly."

Number of Furloughed Workers May Have Fallen To A Third

Dan Tomlinson believes that the number of furloughed workers still on the coronavirus job retention scheme may even have fallen as low as a third. He says: "Although it is true to say that in total nine million people have been furloughed for at least one three-week period since March, this cumulative figure does not reflect what’s happening right now. Rather, all the evidence suggests that the number of people furloughed today – as employer contributions towards furlough pay kick in – is likely to be at most half, and maybe even as low as one-third, of this nine million total."