It’s one of those paradoxes of economics that something that makes sense at a company-specific level to gain competitive advantage, is, when applied across the economy as a whole merely a beggar thy neighbour process that ends up making everyone poorer.
Be that as it may, the Bank believes that the numbers on furlough will fall to two million in the third quarter and go down to just one million in October, when the scheme is scheduled to end. The Government daren’t say it will extend, even if minded to, for fear of disrupting this dynamic.
Of late, I’ve been more optimistic than most about prospects for returning to relative normality – that is something close to previous levels of office working and social spending. But it does require a lot of things to go right, and there seems little doubt that some of today’s upsurge in unemployment will be persistent.
Workers left by the wayside are going to require a lot of continued support, in particular with retraining for the rather different jobs that might become available in future – in the digital and green economies for instance. For the moment, there is a big mismatch in skills.
The Government will be judged by its ability to provide a credible bridge to the new economy. Too often in the past, as with the destruction of manufacturing jobs in the early years of the Thatcher government, and the further shrinkage in decently paid blue collar work that took place after the financial crisis, we have fallen short in confronting deep structural change. Let’s not fail again.