EXTENDING the furlough scheme for just eight months in Scotland could save 61,000 jobs, according to analysis by the Scottish Government.
Chief economist Gary Gillespie said the move would cost around £850 million but the wider economic benefits mean it could "pay for itself".
It came as the latest figures showed the Scottish economy contracted by 19.4 per cent between April and June, highlighting the devastating impact of the coronavirus lockdown.
Scottish ministers have repeatedly urged the UK Government to use its borrowing powers to extend its Job Retention Scheme beyond October.
A new report by Mr Gillespie said extending the scheme on a temporary basis for eight months "could reduce unemployment in Scotland by 61,000 through the first half of next year".
It said: "Even though this is only a temporary extension of the CJRS [Coronavirus Job Retention Scheme], it has a persistent, positive impact on the labour market, preventing unnecessarily higher levels of unemployment over the next few years.
"Wider economic benefits from the extension mean that it could pay for itself, increasing GDP and potentially lowering debt as a share of GDP.
"With Covid-19 cases on the rise, it may prove impossible for certain sectors to resume economic activity in a way that is economically viable before the current employment support schemes are due to expire in October 2020.
"Many of these businesses will have a viable long-term future, but only if they continue to be supported.
"This will help keep people in jobs while sectors of the economy currently unable to fully open recover and lead to sustained economic benefits at a relatively small cost."
Mr Gillespie explored an extension of the scheme to the end of June 2021.
His report added: "Some other countries have longer extensions planned, such as Germany (to the end of 2021) and France (to end June 2022)."
Data published by HMRC show that the furlough scheme has protected 779,500 Scottish jobs, around 32% of the total Scottish workforce.
Although the number of people furloughed has fallen as the economy has reopened, more than 217,000 jobs in Scotland are still estimated to be supported by the scheme.
Economy Secretary Fiona Hyslop said the coronavirus pandemic "has had an extremely serious impact on the economy right across the UK".
She said: ““The UK Government must think again about withdrawing blanket support and they must urgently implement some form of extension which would continue to provide help for the sectors that have been most heavily affected.
"Extending the Job Retention Scheme for eight months would save 61,000 jobs in Scotland and help secure a stronger economic recovery from coronavirus.
"Unlike the Scottish Government, the UK Government has the borrowing powers necessary to fund the extension of the Job Retention Scheme and they must act now to protect jobs and livelihoods.
“New furlough statistics for Scotland published today show wide variation between different sectors of the economy.
"Even though in some sectors a significant number of people have gone back to work, the outlook is much bleaker in other sectors.
"In accommodation and food services an estimated 34.4% of staff were still on furlough, and this rises to 57.5% of staff in the arts, entertainment and recreation sector.
“Of course, the furlough scheme cannot continue indefinitely, but an extension would help keep people in jobs while sectors of the economy currently unable to fully open recover and will lead to sustained economic benefits at a relatively small cost.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel