The chances of furlough-induced hysteresis are slim however, and the alternatives – mass layoffs as seen already this week from the likes of British Airways – are much worse, according to Andrew Goodwin, chief UK economist at Oxford Economics.
He said: “If you’re one of the last sectors to go back and you spend six or nine months away from your job, it could be a challenge. But the higher the take-up of the furlough scheme, then the more jobs you save over the medium term and the smaller the hysteresis effects are.
“It is going to be virtually impossible to reduce the effects to zero, because you can’t save every job, but we’re reasonably optimistic that you can save enough jobs so the scarring isn’t significant, and certainly less significant than in other countries where they haven’t got those schemes.”
Those countries include the US, which does at least have the advantage of a much more flexible labour market for workers to bounce back into.
But there are furloughs, and there are furloughs. Some are genuine, and some look like delaying the inevitable against looming structural changes: those such as the restaurant and pubs firms facing the unenviable prospect of opening up again in a climate of social distancing, or the airlines like BA bracing themselves for a major fall in air traffic.
David Blanchflower, a US-based labour market expert and former Bank of England rate-setter, draws the distinction between a “classic” furlough such as a factory shuttered for three months, or the “cafe down the road” catering to the elderly habit of going out for breakfast: “That ain’t coming back,” he warns.
UK unemployment fell rapidly in the latter half of the 2010s due to factors such as the easing of austerity from 2012 onwards, women working for longer due to pensions changes, and the rise of the gig economy. Compared with seven years ago, those out of work more than a year as a share of overall unemployed has fallen from 37pc to 22pc.