In April, the UK government launched an unprecedented job retention scheme to combat the economic fallout of the coronavirus on employment. Under the scheme, the UK government will fund 80% of workers’ wages, up to £2,500 a month, for those workers who were put on furlough by their employer, rather than being laid off.
Since the scheme started, 6.3 million people have been registered, effectively meaning that 23% of the employed workforce in the UK is now being paid by the government.
According to figures released by the government this week, £8 billion has been distributed to workers across the UK so far. With the scheme in place until the end of June at the earliest, it is expected that cost could rise to £30 billion.
Whilst these are indeed extraordinary sums of money, it must be noted that these are extraordinary times. And therefore, extraordinary economic policy is required.
With unemployment figures going through the roof in the US, and unpaid workers demanding the reopening of the economy, social and political unrest is almost at boiling point. The UK has carefully avoided this same fate by keeping incomes flowing, and ensuring that people remain optimistic with a job to go back to.
The major concern for UK policy makers is how long they can keep the scheme going for. The fiscal budget is not infinite and at some point enough will have to be enough. For now, workers in the UK must just hope that the spread of Covid-19 is contained, and the economy reopens, before the government is forced to pull the plug.
THINK LIKE AN ECONOMIST!
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