Summer Economic Update: £1000 Jobs Retention Bonus

The government wants to support as many jobs possible. To support people back from furlough as we safely reopen the economy, employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

Why will this protect jobs?

• The furlough scheme has protected over 9 million jobs. The scheme was always intended to be temporary support through the crisis and it will close at the end of October.
• To provide additional support to firms to keep employees as demand returns, we are introducing the Job Retention Bonus.

What is the bonus?

• This is a one-off payment of £1,000 to employers for each employee who was furloughed, has been continuously employed until 31 January 2021 and is still employed by the same employer as of 31 January 2021.  
• Employees must have been continuously employed, earn an average of more than £520 per month in November, December and January and have been furloughed and legitimately claimed for under the Coronavirus Job Retention Scheme at any point to be eligible.

Whose jobs will this protect?

• This support is available for up to 9.4 million jobs (number of jobs that have been furloughed).
• Around 90% of employees furloughed earned above the Lower Earnings Limit (£520 per month) at some point during the year 2019/20.
• Young people, people working part-time and with lower income are more likely to benefit from the scheme, as well as employees in the food and accommodation sector, who are more likely to be of Pakistani or Bangladeshi ethnic origin. [1]
• Survey data shows as of end of May 2020, just under a fifth of BAME individuals were furloughed compared to around a quarter of non-BAME.[2]
• Young people are more likely to be furloughed. Resolution Foundation analysis showed that 30% of 18-24 year olds had been furloughed (vs 21% of all employees).
• The bonus will have a disproportionately bigger impact on low wage jobs, which are more likely to be held by young people, women and those from ethnic minorities.[3]

Sources:

[1] Based on internal analysis

[2] HMT analysis of UKHLS COVID-19 module.  

[3] https://www.ethnicity-facts-figures.service.gov.uk/work-pay-and-benefits/pay-and-income/average-hourly-pay/latest