Job retention schemes during the COVID-19 lockdown and beyond

Job retention (JR) schemes have been one of the main policy tools used by a number of OECD countries to contain the employment and social fallout of the COVID-19 crisis. By May 2020, JR schemes supported about 50 million jobs across the OECD, about ten times as many as during the global financial crisis of 2008-09. By reducing labour costs, JR schemes have prevented a surge in unemployment, while they have mitigated financial hardship and buttressed aggregate demand by supporting the incomes of workers on reduced working time. Looking forward, governments need to be vigilant to ensure that JR schemes are not downscaled too quickly, and allow viable jobs to be destroyed, or too slowly, and become an obstacle to the economic recovery. When the health and economic situation improves, JR support needs to be better targeted to jobs that are viable but at risk of being terminated and place a greater focus on supporting workers at risk of becoming unemployed rather than their jobs.