Wednesday, 13 May 2020

The crazy “Job Retention” or “furlough” scheme.


About 95% of the human race have no interest in the basic purpose or logic behind government schemes (or any other scheme) as long as such schemes appear to be well intentioned in some sort of way.

The latter 95% figure applies as much the intelligentsia as it  does to street sweepers, labourers, plumbers and so on. That is, while members of the intelligentsia have been to university and have been taught how to churn out nicely crafted English, it’s very debatable as to whether they are any more able to think their way out of a paper bag than street sweepers, plumbers and so on.

And the UK's so called “Job Retention” scheme (i.e. furloughing) is a nice example of a scheme that looks well intentioned, but which on closer examination turns out to be nonsense. I actually drew attention to the nonsense some time ago on this blog in that I praised an article by Guy Standing published on March 26th which took the p*ss out of furloughing. (Title of his article: "The Job Retention Scheme makes no sense....").

Since the so called “think tank” the Resolution Foundation has published a fair number of articles on furloughing, I thought I’d run through some of their articles in search for some sort of justification for furloughing. Their articles contain plenty of banal hot air, for the example the point that furloughing (i.e. having government pay about 80% of the wage of those who have lost jobs because of Covid) helps those employees.

They also make the banal point that the scheme adds to the deficit, which of course helps maintain employment among those who are not forced out of their jobs because of Covid.

However, the Resolution Foundation do no seem to have worked out that as regards the latter deficit point, it is the INCREASED DEFICIT that is doing the work, not the Job Retention scheme as such. That is, exactly the same job boosting effect could be produced by a temporary boost to the state pension, a temporary boost to unemployment benefit for ALL THE unemployed,  increasing public spending on any number of other items, or cutting taxes.   

Thus the basic question for advocates of furloughing to answer (unbeknown to the intelligentsia) is: why offer what is essentially very generous levels of unemployment benefit to those thrown out of work by Corvid, while those thrown out of work for other reasons just get the standard unemployment benefit (now called “Job Seekers Allowance” in the UK)?

For starters, the latter is a blatant form of inequality. Thus you’d expect the self-appointed “progressives” working for think  tanks to object to that inequality. But not a bit of it: to repeat, those who work for think tanks are no more able to think than  anyone else.

As for the popular idea that furloughing helps employees keep their jobs, it doesn’t in that there is no obligation on employers to offer furloughed employees their jobs back at the end of the furlough period.

And then there’s the claim that furloughing helps employers!! How exactly? If an employer lets an employee go other than for Covid related reasons, the employer is of course relieved of having to support the employee because the state than provides unemployment benefit for the employee.

But under the Job Retention scheme it’s exactly the same! That is, the employer is relieved of having to support the employee – with the difference that the employee may get a more generous level of benefits. But that’s nothing to do with the employer.

Another fatuous claim made for furloughing is that it makes it easier for employers to maintain their workforces: that is, a generous level of what is in effect unemployment benefit will obviously induced those concerned to abstain from looking for other work and will induce them to wait till their old employer can re-hire them.

But what exactly would be wrong with someone thrown out of work by Covid getting themselves another job? That would cut unemployment and boost GDP. And if the job was a relatively low paid and/or temporary job, what of it? That would just mean that as soon as the relevant person’s old job reappeared, they’d quit the low paid job and return to their original employer!

Indeed – and try not to die of laughter – the UK government is specifically seeking furloughed employees to take up temporary posts in the civil service!!  You couldn’t make it up.  Not even Sir Humphrey Appleby or Jim Hacker could have thought of this sort of self-contradictory nonsense!

In addition to the latter self-contradiction, the basic idea behind furloughing also runs counter to the whole idea behind the Job Guarantee, namely that (as JG advocates rightly claim) it is actually desirable for those thrown out of work to get temporary and relatively unproductive jobs, pending the appearance of something better.

And finally, and as distinct from where the best available alternative job for someone thrown out of work is a temporary and relatively unproductive job, there will be cases where being thrown out of work can induce those concerned to engage in a job search which results in their finding a BETTER job than the one they’ve been thrown out of. And what exactly is wrong with a move to the latter and better job?

After all, every other employee in the country ALWAYS HAS BEEN on the look-out for a better paid and more suitable job than the one they currently hold! The more suited employees are to the jobs, the higher is GDP and the happier the employee will be nine times out of ten.

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