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End of furlough, start of a rapid recovery?

27 August 2021

Karmel Edmonds

Home » News » End of furlough, start of a rapid recovery?

As furlough draws to a close, the question remains as to how individuals and the economy will fully recover from the pandemic.

In March 2020, with the Covid-19 pandemic forcing many businesses across the UK to close their doors, the government introduced the Coronavirus Job Retention Scheme – more commonly referred to as ‘furlough’. This enabled employers’ to keep staff on their payroll whilst businesses were closed, but with the government covering 80% of the furloughed individuals’ wages (up to £2,500 a month).

The number of furloughed employees peaked at 8.9 million in May 2020 and has since dropped to around 3.4 million (figures recorded in June 2021). July 2021 saw the government reduce the percentage of wages covered from 80% to 70%, with employers expected to cover the 10% deficit. From August, the government subsidy dropped again from 70% to 60% and is expected to stop completely in September 2021.

With furlough coming to an end, there remains a long road ahead for the economy to reach pre-pandemic levels, with the immediate future being uncertain for many workers. The future impact on the individual and the economy remains unknown, as we wait to see and feel the long-term impact of the virus.

Not a quick fix

Thankfully, there are early positive signs that the jobs market is starting to improve, with a number of reports of high levels of job positions being advertised – in fact, in some industries, more positions are being advertised than can be filled. Whilst these signs are promising, the jobs market will not return back to pre-covid levels in a hurry. The weighting of demand across sectors has been unevenly spread and the long term scarring impact on personal finances will be felt for a time to come.

Tackling the new challenges of a post-covid jobs market will take effort on the part of the state and of the individual, as jobs that once existed are no more and entirely new ones have popped up in their wake. Workers will need retraining, confidence boosting, support with identifying roles and applying for them, not to mention coming to terms with managing undulating finances.

The future impact on the individual and the economy remains unknown, as we wait to see and feel the long-term impact of the virus.

Nesta’s Rapid Recovery Challenge was launched in September 2020 in the hope of identifying, supporting and scaling up promising innovations that improve access to jobs and money for people within the UK, focusing on those hardest hit by the economic shock resulting from COVID-19. The £2.8 million Challenge is funded by Nesta, in partnership with the JPMorgan Chase Foundation, the Money and Pensions Service and the Department for Work and Pensions.

14 promising semi-finalists were announced in December 2020 and each was awarded £125k to develop their solutions. This cohort was then narrowed down to six finalists in May 2021, who were awarded a further £150k in order to rapidly scale their delivery throughout the summer of 2021. The six tools offer a range of services which we hope will go some way in lessening the impacts of the end of furlough and provide numerous ways for furloughed workers to reconnect with the jobs market and help them along with their finances.

What do the six tools do?

Designed to support access to money

Hastee has enabled improved financial health of workers by allowing them to access their earnings on demand, breaking the traditional monthly pay-cycle that forces many into debt and financial stress.

IncomeMax has launched a ‘Messenger’ service to provide support to people struggling to cope financially, who prefer to talk digitally, enabling more people to maximise their income, pay their bills, and overcome debt issues.

Turn2Us has developed a digital grants platform which enables people in financial hardship to find and apply for financial support quickly and securely.

Designed to support access to employment

Beam has created a digital hub for people who are 18+ and are either homeless or at risk of homelessness to give them access to the knowledge, confidence and contacts to help them to secure stable work.

Evenbreak has launched a ‘Career Hive’ offering relevant and accessible careers support for disabled people who are looking for new or better work, delivered by careers professionals with lived experience of disability.

Udrafter has developed a unique approach to intern employment by giving interns rapid access to industry experience whilst being paid through smaller pieces of work.

The two winners of the Rapid Recovery Challenge (one relating to access to money and one relating to access to employment) will be announced in September, coinciding with the end of the government’s furlough scheme. To find out who the winners are and to find out more about the challenge, visit the Rapid Recovery Challenge page for the latest updates.