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12 May 2020updated 06 Oct 2020 9:45am

How far can furlough go?

By Samir Jeraj

Paying 80 per cent of the wages for 6.3 million jobs has made it possible to ask people to stay at home to save lives, notes Torsten Bell director of the Resolution Foundation. He argues that there should be no ripping off the plaster, particular as with this recession the sectors losing most jobs are the ones that absorbed the unemployed from the previous one in 2008, namely hospitality and non-food retail.

Policy-makers should be focused on the “messy interim” where social distancing is still the norm, but some economic activity has been restored, he argues. Governments will have to worry about the impact of continued large-scale worklessness while companies face uncertainty over demand. The answer, Bell says, will probably be some form of “phasing out” that is in tune with developments in health and the economy, and is open and transparent.

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