2.4m employees still furloughed after May re-opening

2.4 million employees still furloughed after May reopening according to latest HMRC JRS statistics.

The HMRC data shows that the number of people on furlough fell by over a million during May, from 3.5 million on 30th April to 2.4 million on 31st May.

Resolution Foundation analysis suggests that the number of employees on the Coronavirus Job Retention Scheme (JRS) fell rapidly during May as the economy reopened, but far more people remain furloughed than previous official data has suggested, while older workers are disproportionately likely to remain ‘parked’ on furlough for long periods.

The Resolution Foundation said the fall in numbers was driven largely by the reopening of social sectors such as hospitality. As a result, under 25s experienced the biggest fall in furlough rates – halving from 616,000 to 322,000.

But while the recent fall is encouraging, the Foundation warns that the total number of employees still on furlough is far higher than the ONS survey estimate that just 1.7 million employees were furloughed at the end of May. The ONS survey also suggested that the pace at which furlough rates are falling has slowed considerably post-17 May.

The Foundation’s own research shows that the age profile of furloughed workers is changing too, with around half aged 45 and over. It finds that older workers, in particular, have been ‘parked’ on furlough during the recent reopening – and that over 600,000 workers aged 45 to 64 have now been unemployed or fully furloughed for at least six months.

This, says the Foundation, should remind us both of how vital the furlough scheme has been in preventing catastrophic levels of unemployment during the crisis, but also that the rise in unemployment is ahead of us, rather than behind us. Further support is likely to be needed when the furlough scheme is ended completely in September.

Daniel Tomlinson, Senior Economist at the Resolution Foundation, said “The grand reopening of the economy in May has caused over a million people to return to work from furlough. It’s especially encouraging to see so many young people – who have been hardest by the Covid economic crisis – finally returning to work.’

“But with 2.4 million employees still not fully back to work, today’s figures offer a sobering reminder of just how incomplete our Covid recovery is.”

“With the furlough scheme starting to be phased out today, the Government must do all it can to prevent a big rise in unemployment this Autumn – particularly for those who have spent long periods not working during the pandemic.”

Commenting on the figures Sarah Coles Personal Finance Analyst, Hargreaves Lansdown said “Furlough figures plunged in May to 2.4 million – the lowest they’ve been since Halloween last year. It bodes well for the tapering of furlough today, which means furloughed staff will start costing employers significantly more to keep on the books. However, 2.4 million people remain vulnerable, and older people, travel workers and men look increasingly at risk.”

“The fall in the furlough figures has been faster than the Bank of England forecast. At the end of March there were 4.3 million people on furlough, at the end of April there were 3.5 million, and at the end of May there were 2.4 million.”

“However, some groups remain vulnerable. Older people are returning to work far slower than younger people. Furlough numbers for the under 25s dropped like a stone as hospitality businesses reopened, but the older you were, the less likely you were to return to work, and furlough numbers for those aged 65 and over fell just 16%.”

“Men are slower to come off furlough too, and men have overtaken women using the scheme for the first time since the very earliest days of furlough. This owes much to the fact that so many have returned to hospitality businesses, and far more women work in these roles than men.”

“In some industries, furlough is still widespread, most notably airlines at 57%, hotels at 57% and tour operators and travel agents at 51%, and in these industries, the numbers on furlough dropped far more slowly than elsewhere.”

“For those still stuck on furlough, there’s the risk their employers will be seriously reconsidering whether they can afford to keep them on now they are shouldering 10% of their wages – alongside pension and NI contributions. These questions will become even more pressing when the scheme tapers again in August.”

“There remains the hope that the economy will reopen and recover enough to protect your job before support falls away entirely. Certainly, noises from the government indicate this is a key priority, which could help tip the balance for employers.”