Box B: Furlough and household financial distress during the Covid-19 pandemic - insights for future lockdowns

Christoph Görtz, Danny McGowan and Mallory Yeromonahos ()

National Institute UK Economic Outlook, 2021, issue 4, 14-15

Abstract: The Coronavirus Job Retention Scheme (CJRS) was a key element of the government's economic response to the Covid-19 pandemic. Introduced in March 2020, the CJRS aimed to safeguard jobs and income by allowing employers to place workers on temporary leave rather than making them redundant. A benefit of the scheme to employers was that they could reduce their wage bill while they closed during national lockdowns or in the face of low demand, as the government paid 80 per cent of furloughed workers' wages, up to a maximum of U+00A32,500 per month. When business conditions returned to normal, employers could draw upon their furloughed workforce to reactivate their businesses without incurring hiring costs and delays. Additionally, by maintaining links between employers and employees, the scheme avoided the loss of firm-specific skills.

Date: 2021
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