Furlough scheme protects route back to work for young Brits

The furlough scheme shielded young Brits from the worst economic impact of the pandemic, allowing them to return to work rapidly, reveals a fresh study released today.

Despite fears over a wave of redundancies after the furlough scheme was wound down at the end of September, three in four young people who were unemployed during the winter lockdown have returned to jobs, research by the Resolution Foundation (the Foundation), an economic think tank, has found.

Experts were concerned companies would be unable to bring furloughed workers back onto their payrolls due to the Covid-19 crisis hitting their finances.

However, the Foundation’s report reinforces separate official figures revealing fears of a joblessness spike after furlough were misplaced.

The UK unemployment rate dipped to 4.2 per cent in the latest quarter, according to the Office for National Statistics.

The number of workers on company payrolls is now above pre-Covid levels.

Louise Murphy, an economist at the Foundation, said: “Young people were hit hardest by the economic impact of the pandemic, but have bounced back with a swift return to work, thanks in large part to the success of the furlough scheme.”

Some economists have argued that the government stepping in to cover employers’ staffing costs during the pandemic allowed businesses to retain roles and strengthened incentives to keep workers on the books until the economic situation improved.

Countries including the US that provided direct financial support to households instead of footing businesses’ wage bills have experienced a greater degree of labour market churn.

Joblessness among 18-24 year olds is now actually lower than it was before the pandemic struck.

However, a large proportion of young people who were not in work during the winter lockdown have returned to the jobs market via insecure work – such as securing jobs on a zero-hour contract – with one third of this group now employed in fragile roles. This compares with 12 per cent of young Brits who were in work throughout the Covid-19 crisis.

Signs of career dissatisfaction are more common among young Brits who experienced joblessness during the pandemic, with one in four of this group looking for new career opportunities, the Foundation said.

Worryingly, around 50,000 young men have dropped out of the workforce altogether or are not in full-time education, in a sign the UK’s workforce could be permanently smaller over the coming years.

Extended periods of unemployment also tend to lead to a deterioration in mental health, the Foundation found. 

“While unemployment has fallen, the number of young people dropping out of education and the labour market altogether has risen – especially young men,” Murphy added.