Ross Clark Ross Clark

The furlough scheme is holding back the jobs market

(Photo: Getty)

Last week the Bank of England increased its forecast for economic growth in 2021 from 5 to 7.25 per cent. Now comes more evidence of an economic recovery that is gathering pace, in spite of many lockdown measures still being in place.

A UK report on jobs compiled by KPMG and REC, which uses data from 400 recruitment firms, measured in April the sharpest new increase in vacancies since it began in 1997. Contrary to the claims by the Labour party and others that British workers are facing a future of increasingly short-term contracts, the rise was principally down to a rise in vacancies for permanent roles which were at their highest since March 1998. The demand for temporary roles was at its highest since October 2014.

There is a danger the furlough scheme becomes a semi-permanent form of very expensive unemployment benefit

There is, however, a fly in the ointment. While the number of vacancies was at a record high the number of candidates available shrank in April. Employers cited a number of reasons for this. The prime one was uncertainty created by the pandemic: employees don’t feel like switching their jobs while everyday life remains under restrictions. However, they also mentioned Brexit, IR35 legislation (the government’s drive to get people on PAYE books if they are judged not to be genuine freelancers) and the furlough scheme.

The first of these ought not to be a problem for employers looking for skilled workers from overseas. In campaigning for Brexit, and in various pronouncements since, the Prime Minister made it clear that he wanted to open the UK jobs market to skilled people from countries outside the EU. The government has introduced a new points-based immigration system which puts workers from all over the world on an equal footing.

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