Labour market policies and productivity
This is a preview from the National Institute Economic Review, November 2020, no 254.
The Coronavirus Job Retention Scheme has been hugely successful, saving the jobs of millions at a time when vacancies dropped through the floor. The medium-term path for unemployment will depend on two sets of policies: whether the government continues to protect jobs and whether it is successful in creating and matching new vacancies.
This Box, prepared by NIESR Principal Economist Rory Macqueen, expands on the analysis by NIESR Visitor Andrew Benito to look at government policies to raise the level of job creation and how that interacts with the withdrawal of the furlough scheme. With the ending CJRS the danger is that lost skills and employment prospect scarring reduce workforce productivity at the same time as the government is trying to raise productivity to incentivise job creation. During the recovery we need both job protection and job creation: increasing the latter does not mean the government can costlessly do away with the former.