Over half of furloughed workers have returned to work, ahead of the Job Retention Scheme’s phase-out beginning today

Widespread reports that nine million workers are currently furloughed are wide of the mark, with over half of such workers already likely to have returned to work, according to new Resolution Foundation research published to coincide with the beginning of the phase-out of the Job Retention Scheme (JRS) today (Saturday).

Today marks a big shift in the JRS as, for the first time, firms have to contribute towards the cost of furloughed workers by paying their employer National Insurance and pension contributions. The average cost will be £70 a month – or five per cent of the employees’ pre-furloughed pay.

Ahead of this milestone for the UK labour market, many people – including the Prime Minister on 24 July – have said that over nine million workers (a third of the private sector workforce) are currently furloughed.

However, the Foundation’s analysis shows that this is a long way from the truth. While over nine million workers have been furloughed at some point since March, less than half that number remain furloughed today.

The analysis, based on three separate ONS surveys, suggests that the peak number of furloughed workers at any one time was almost eight million. This was reached as far back as late April.

Millions of furloughed workers have since returned to work, either fully or as partially furloughed part-time workers, meaning that fewer than 4.5 million workers are now furloughed. The report calls on HMRC to end the widespread confusion around take-up of the JRS by publishing data on currently furloughed workers.

The Foundation says that the peak and subsequent fall in the number of employees on the JRS demonstrates the success of the scheme in protecting firms and workers during the lockdown’s introduction and easing. However, with millions of employees still being furloughed, the threat of significant redundancies loom large as the JRS is phased out between August and October.

The Foundation says that this risk is highest in social sectors, such as hospitality and leisure, where an estimated four-in-ten workers are still furloughed. Over a million workers in these sectors alone face a heightened risk of unemployment in the coming months.

To reduce this redundancy risk, the Foundation says the Government should adopt a slower approach to phasing in employer contributions to the costs of furloughed workers in these hardest hit sectors.

Dan Tomlinson, Senior Economist at the Resolution Foundation, said:

“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.”