IEA: Ease tax burden to stimulate job creation after furlough ends

The government should tilt policy toward stimulating job creation after the furlough scheme ends today, according to a free-market economic think tank.

Professor Len Shackleton, editorial and research fellow at the Institute for Economic Affairs (IEA), slammed the chancellor’s decision to hike national insurance as the jobs market emerges from 18 months of life support.

“The government should be doing all it can to facilitate new jobs. At the moment this is not the case. National insurance increases, and the continuation of the failing apprentice levy, raise the costs of employing people directly,” he said.

Sunak will deliver his next budget on October 27.

The criticism comes as around one in 20 workers are still on furlough despite the initiative ending today, according to the Office for National Statistics (ONS).

Experts have warned furlough rates are still too high to avert a spike in joblessness after the scheme ends.

The Resolution Foundation said this week “the risk of a rise in unemployment and inactivity when the scheme closes is still real.” 

According to latest official estimates from the Treasury, 1.6m people were on furlough in July, 340,000 fewer than in the previous month.

Businesses across the UK are suffering from shortages of everything from poultry to CO2, partly caused by a paucity of lorry drivers derailing the British logistics system. 

However, HGV driver shortages are unlikely to clear after furlough ends, according to Hoa Duong, economist at PwC UK.

“This week’s end of the furlough scheme is not expected to be a ‘silver-bullet’ for the current lorry driver shortage or the UK labour market paradox, in which high unemployment and high job vacancies coexist.”

“This is because the number of workers in the transportation sector, including HGV drivers, make up only 9% of the total furloughed workers by the end of July.”