Chancellor Rishi Sunak praised data from HM Revenue and Customs (HMRC) indicating 2.4 million people were utilising the coronavirus employment retention plan at the end of May, down from 3.5 million at the end of April.
Nearly 180,000 people returned to work in "beverage serving" enterprises, while 133,000 people were on furlough in "restaurants and mobile food service" businesses.
However, one think tank issued a caution that the scheme was still supporting more jobs than expected.
The elimination of furloughs and other business support, according to Labour and the trade unions, might jeopardise jobs and stymie the UK's recovery.
The number of people on furlough decreased in April and May as restrictions on retail and hospitality were eased. Furlough is a government subsidy that pays 80% of wages to those who are temporarily laid off.
The Treasury cited Office for National Statistics (ONS) estimates from 1 July 2021 as evidence that the number had fallen even more in June, to between 1.3 million and 1.9 million.
The findings come as the scale of support for damaged businesses begins to be reduced - even though some, such as nightclubs, taverns, and travel agencies, continue to face significant trading restrictions.
It implies that starting July 1, 2021, the government will only compensate furloughed workers 70% of their earnings, with employers covering the remaining 10% - and that the support will fall off until the scheme is completely phased out at the end of September.
Another source of assistance for struggling businesses is business rates relief for companies in the leisure, hospitality, and retail sectors, which has been reduced from 100% relief to a 66% reduction as of today.
According to the Resolution Foundation, the HMRC figure of 2.4 million furloughed at the end of May was worse than an earlier ONS estimate of 1.7 million furloughed.
It served as a "sobering reminder of exactly how incomplete our COVID recovery is," according to Daniel Tomlinson, the senior economist at the think tank.
“With the furlough scheme starting to be phased out today, the government must do all it can to prevent a big rise in unemployment this autumn - particularly for those who have spent long periods not working during the pandemic.” He added.
Thousands of employment in the worst-affected areas of the economy are at risk, according to business groups, if support measures are not extended further.
According to Labour, the tapering of business rates relief will affect 375,000 businesses and the tapering of furloughs will affect 450,000.
“Ending the furlough scheme too quickly could kill a recovery before it even starts… Ministers are seriously misguided if they think we can suddenly revert to business as usual," said Gary Smith, general secretary of the GMB trade union.
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