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

Author

Listed:
  • Gortz, Christoph
  • McGowan, Danny
  • Yeromonahos, Mallory

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.

Suggested Citation

  • Gortz, Christoph & McGowan, Danny & Yeromonahos, Mallory, 2021. "Box B: Furlough and household financial distress during the Covid-19 pandemic - insights for future lockdowns," National Institute UK Economic Outlook, National Institute of Economic and Social Research, issue 4, pages 14-15.
    • Handle: RePEc:nsr:niesra:i:4:y:2021:p:14-15
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    File URL: https://www.niesr.ac.uk/wp-content/uploads/2021/11/UK-Economic-Outlook-Autumn-2021.pdf
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    References listed on IDEAS

    as
    1. François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a tool for evaluating redistribution policies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 77-106, April.
    2. Edouard Challe, 2020. "Uninsured Unemployment Risk and Optimal Monetary Policy in a Zero-Liquidity Economy," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 241-283, April.
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