Up to 9.5 million jobs have been created at 1.2 million businesses since March, at a cost to the Treasury of £ 31.7 billion so far.
To ease the scheme’s transition, the government will offer companies £ 1,000 in bonuses for every worker they bring back from leave and keep their jobs until January, at a total cost to the Treasury of £ 9.4 billion. £.
However, the NIESR said extending the holiday program until the middle of next year would have roughly the same cost – with a direct cost of £ 10 billion – and would be more effective in saving jobs. .
“The planned closure of the leave appears to be a mistake, motivated by an understandable desire to limit spending,” said Garry Young, deputy director of NIESR. “The program was intended by the Chancellor to be a bridge through the crisis and there is a risk that it will end prematurely, increasing the likelihood of economic scars.”
Britain’s oldest economic research institute has said that without an extension it expects unemployment to reach 3 million by the end of the year. However, he said keeping the leave program open would protect up to 1.2 million workers who are on the verge of losing their jobs and reduce unemployment in Britain every year until 2024.
Despite the high upfront costs to the Treasury, NIESR said expanding the program could pay off. This is because workers on leave would continue to pay taxes, would be more likely to spend in the economy with plan income, and would not need to receive unemployment benefits.
The decline in government support for employment comes as the UK economy slowly recovers from a 25% drop in economic output in March and April at the start of the pandemic. With the gradual easing of foreclosure restrictions, gross domestic product (GDP) growth resumed in May, albeit at a slower pace than expected.
The NIESR said it expected UK GDP to decline by 10% this year and increase by 6% in 2021. However, it said the level of economic activity at the end of 2019 – before the crisis hits – probably will not be found until the second half of the year. from 2023.
Steve Barclay, the chief secretary of the treasury, said it was the right thing to do to close the leave program. Speaking at an online event hosted by the center-right think tank Onward, he said the purpose of the program was to keep people connected to their work during the pandemic.
“It would be strange to focus so much on keeping the connection to the job and making sure people aren’t out of the workforce and then having a program that has been extended and perpetuated that.
Ruling out an extension, he said the government was providing more funding to help create new jobs. “The leave program will not be extended. We don’t think it’s the right thing for people to be out of the workforce for very long periods of time. “