This comes after new research finds that long-term unemployment and furlough has affected 1.9 million people, leading to calls demanding that the furlough scheme is extended.
A new report by Resolution Foundation, a think-tank, has investigated how employees being placed on long-term furlough could end up being damaging to workers.
This comes after the report found that, due to the pandemic, almost 2 million workers (1.9 million) have either been unemployed long-term or been placed on full furlough for six months.
Although the research notes a large difference between furlough and unemployment, the report suggests that these also share some similarities.
Most notably, it found that people who have been furloughed for over six months could ultimately see a loss of skills whether that is overall or just in relation to the rate of learning that would have occurred if the employees were working full-time.
In addition, the think-tank suggested that once the Coronavirus Job Retention Scheme is withdrawn, many employees currently on furlough could end up losing their job – meaning that these workers will have been out of work for the same length of time as people facing long-term unemployment.
It also identifies that furloughed workers could experience a slower pay growth when they do return to work, having missed out on certain opportunities of growth in skills and experiences.
This, it claims, will be most prevalent for young people who see the fastest amount of development and pay progression. This has been echoed previously in other research with over half of employees aged under 35 fearing that COVID will have a negative impact on their careers.
In addition to this, the report found that 8 per cent of workers expect to lose their jobs within the next three months or have been told by their organisation that they will be made redundant.
As such, the confidence levels of furloughed workers has also taken a hit with one in seven workers who have been placed on furlough for over six months stating their belief that they will not find a job over the next year.
The Resolution Foundation has called for a blanket extension of the furlough scheme, in light of restrictions that are currently in place. It states that blanket support should remain for at least two months after restrictions have been lifted.
However, after this point, the report states that certain sectors which remain shut or heavily curtailed- such as hospitality and leisure- should receive the CJRS for much longer.
The think-tank claims that sectors which are not in this position should have support withdrawn at a pace consistent with the ability of the labour market to reabsorb the workers these firms will release.
To aid younger workers, the Resolution Foundation also called on the Kickstart Scheme to be extended beyond December 2021 and stated that those on full-furlough should be be eligible for this scheme. It was also recommended that traineeship and apprenticeship numbers should be expanded.
Nye Cominetti, Senior Economist at Resolution Foundation, said:
Ten months into the crisis, almost two million people have now been affected by long Covid in the labour market, having not worked for at least six months.
And while the UK’s economic prospects are finally looking up, job insecurity remains high, particularly among those who have spent long periods not working or who are currently furloughed.
The chancellor must use his Budget to set out his own roadmap for phasing out the furlough scheme gradually and in a way that acknowledges where the risks of rising unemployment are highest – in sectors like hospitality.
This would keep a lid on rising unemployment and encourage firms to bring back existing workers, while tax breaks on hiring could help more people to move jobs too.
*This research was obtained from Resolution Foundation’s ‘Long Covid in the Labour Market’ report which was published in February 2021.