ReWAGE News Archive

The UK’s coronavirus job retention scheme (colloquially referred to as furlough) ran from March of 2020 to September 2021 to enable employers to retain and pay staff through the Covid pandemic when national lockdowns made many jobs – such as non-essential retail, accommodation and food services – unviable overnight.

ReWAGE’s new report: The UK’s Coronavirus Job Retention Scheme (furlough) and its impact on workers’ mental health argues that it was effective in mitigating against the risks of mass unemployment during the pandemic, but if needed again in future a model should be adopted that does more to protect workers’ mental health as well as protecting businesses, and that more should be put in place to support women’s mental health.

The furlough scheme evolved during the lockdown periods - during its first iteration (March 2020) the government paid up to 80% of salary, but scheme participants were not allowed to do any form of work; during the second phase (July 2020) ‘flexible furlough’ was introduced where employees could return to work on a part-time basis, whilst the furlough scheme covered their non-working hours (similar to short-time work schemes used in other European countries).

Full furlough, where employees did no work, occupied an intermediate position between employment and unemployment. Early pandemic research suggested that furlough had a strong protective effect relative to unemployment - particularly for men – however, over time the mental health of long-term non-working furloughed employees became significantly worse compared to those in employment. Women’s experiences on furlough were typically worse than men’s, while men were more negatively affected by transitions into unemployment.

Data suggests that relative to being in full-employment, transitions into “flexible furlough” were not associated with a statistically significant downturn in mental health, which was the case for both men and women.

Professor Burchell, Professor in Social Sciences at Magdalene College, University of Cambridge, said:

“Relative to comparable European job-retention and ‘short-time work’ schemes, the UK’s furlough scheme was more effective in protecting businesses than employees, who after a period of non-working may still be vulnerable to dismissal.

“However, understanding how work contributes to good mental health enables the design of a job-retention scheme that not just avoids the negative effects of unemployment but can also support wellbeing. In relation to job-retention schemes, those that follow the short-time working model which support the majority of wages and keep people in employment, may be most effective in protecting mental health. Recent research in a UK context has highlighted that working just one day per week may be all that is necessary to confer the positive benefits of employment.”

The report concludes that the introduction of the furlough scheme was vital in preventing a surge in unemployment when the lockdown restrictions were introduced in March of 2020. For the most part, it was successful in returning workers to employment, with very few furloughs resulting in redundancies, but if such a scheme were needed in the future, then the short-time working model is the one that most effectively protects workers’ mental health.

The paper also recommends that the differing gendered experiences of job-retention schemes should be studied more closely, to ensure that women’s mental health is also supported in periods of crisis.

This ReWAGE policy brief was authored for ReWAGE by Niamh Bridson Hubbard and Professor Brendan Burchell, both of Magdalene College, University of Cambridge.