Le soutien économique du Royaume-Uni est renforcé par le nouveau plan, mais des défauts de conception évitables limiteront son succès à endiguer la hausse du chômage.
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Economic policy yesterday caught back up with the ramping back up of social distancing restrictions by the Prime Minister earlier in the week. The Chancellor rightly announced new measures rather than sticking to plans to phase out help for workers and firms.
His most significant policy was the Job Support Scheme (JSS), an extended, reformed and rebranded form of the existing partial furlough policy. Where firms choose to use it, this will provide very significant income protection for workers that employers bring back for more than a third, but less than all, of their usual hours of work.
But while the JSS will reduce the coming rise in unemployment, it will far from halt it. Indeed the policy has significant design flaws that will limit it’s ability to deliver against the Chancellor’s stated objective of ensuring as many people as possible are able to keep working in “viable jobs”.
The decision to require employers to contribute half of the costs of the scheme means that while some firms will wish to use it to retain workers because of high recruitment/training costs, it is not well designed to encourage firms to cut hours rather than jobs. This is particularly true in the low wage, high employment sectors like hospitality and leisure that are at the centre of the unemployment crisis we face.
While the Job Retention Bonus payment of £1,000 for employers that bring furloughed workers back until the end of January will help overcome some of these challenge, it is poorly targeted and even where it does help merely moves the jobs-cliff edge from October to January.
The Chancellor should scrap the Job Retention Bonus and use the £7.5 billion savings to ensure that employers do not need to make a material contribution to the costs of the JSS.
With unemployment now starting to rise, households are about to start feeling the living standards hit that government policy has, thus far, done an impressive job of shielding them from. Those losing their jobs and moving onto Universal Credit will see far bigger income falls than furloughed workers experienced. And as things stand that will be deepened by plans to reduce the level of Universal Credit by £1,000 next April, at a time when unemployment will remain high.
This crisis already feels like it has been with us for far too long, but the grim reality is that on both the health and the economic side it is here to stay for some time to come.
On Thursday the Chancellor’s brought economic policy back in line with the reality of a sharp rise in coronavirus cases and introduction of tighter social-distancing restrictions with his hastily-arranged Winter Economy Plan. In this note we briefly look at the economic context for the new measures announced today, before providing a detailed evaluation of their likely impact.