Published on September 3rd, 2020 | by The GC Team0
Job Retention Bonus just a sticking plaster, says IoD
The Institute of Directors is calling on the Treasury to act quickly to help prevent a surge in unemployment, as the Job Retention Bonus could do little to more prevent job losses. The institute said the £1,000 bonus for employers who bring workers back from furlough and retain them in employment until the end of January 2021 is “unlikely to cut through”.
In a survey of over 730 business leaders carried out between 31 July – 14 August 2020, fewer than one in five who had furloughed staff said the grant would help them keep hold of their people, and only 3% said it would have a substantial effect on their firm’s ability to retain employees.
Although just over half of the directors surveyed were positive about being able to contribute to furloughed workers’ salaries until October, 28% said they were pessimistic about their organisation’s ability to sustainably meet the additional costs.
The directors’ group has recommended that the Government cut the burden of employment taxes; for instance, by increasing the Employment Allowance for small businesses, or increasing the salary threshold for Employers’ NICs.
“More generally,” it said, “some form of an extension to the furlough scheme should remain on the table.”
Tej Parikh, Chief Economist at the Institute of Directors, said: “As the furlough scheme winds down, job losses are starting to mount. The Job Retention Bonus is just a sticking plaster, and is unlikely to give many businesses the support needed to retain staff.
“For many businesses, demand is still uncertain, and social distancing puts a lid on growth prospects. Firms are having to adjust to the fact that this situation could last for some time.
“The Treasury must step up to the plate quickly. Urgent support for jobs is crucial, firms must be put in a position to hold onto and hire staff. Cutting employment taxes will be crucial to flatten the surge of unemployment that’s expected later in the year.”