Chancellor told to act now or face 'tsunami of unemployment'

Chancellor Rishi Sunak faces mounting pressure to extend the furlough scheme, as the TUC today (September 4) put forward its own blueprint for protecting jobs and called on the government to take action before the scheme ends in October to prevent a “tsunami of unemployment”.

The TUC, which worked closely with other unions including Unite alongside the government to develop the present Jobs Retention Scheme, has urged the chancellor to consider some form of short-time working scheme which has been successfully introduced in other European countries such Germany, Austria and France.

The need for some alternative has become more and more urgent as the clock winds down to October 31, when the government’s furlough scheme is set to abruptly end, which has raised deep concerns over a sudden and huge spike in job losses.

Already, as the scheme — which provides an 80 per cent state wage subsidy for workers who cannot work as long as employers agree to keep these workers on their payrolls — has begun to wind down, job losses across industries have continued to escalate exponentially.

Last month, it was estimated that nearly three-quarters of a million jobs have gone since lockdown began even with government wage support.

Against this backdrop, support for some form of short-time working scheme to follow the current furlough scheme has grown considerably.  

Under the new scheme proposed by the TUC, workers would receive 80 per cent of their salary for the hours they are not in work, including training hours, and 100 per cent of their pay for the hours they are in work. Companies would then be given a 70 per cent subsidy by the government, under the condition that they bring back every worker on the scheme for a certain minimum level of hours.

This would incentivise businesses impacted by the coronavirus pandemic to protect jobs and encourage job sharing so that people stay in work as demand slowly returns and companies build back up to full operations.

The TUC has also proposed additional support for workers who cannot work because they are clinically vulnerable or caring for someone who is shielding – in their case, they would not need to work a minimum threshold of their normal working hours in order to receive support.

Other recommendations put forward by the TUC include ensuring that minimum wage workers on the short-time working scheme receive 100 pay; that there is robust support available for self-employed workers; and that any worker working less than 50 per cent of their normal working time is offered state-funded training so that they can transition into industries not as hard-hit by the pandemic.

No free ride

Such support wouldn’t be a free ride for employers, the TUC noted. Subsidies for businesses should come with several conditions to build back a better economy and create decent jobs. Businesses which access support must put forward plans for decent pay, allow unions access to their workplaces, and work to eliminate zero hour contracts and other forms of insecure work arrangements.

These companies should also pay their fair share of corporation tax in the UK – which may eliminate tech giants such as Amazon and Google from participating in the scheme – and should not pay out dividends to shareholders while claiming government support.

Commenting on their blueprint to save jobs, TUC general secretary Frances O’Grady said, “The job retention scheme showed what the government can do during a crisis. It saved many people from the dole queue and stopped good companies going to the wall.

“Ministers cannot afford to throw away the good work of the job retention scheme. There is still time to avoid a tsunami of unemployment,” she added.

“The TUC’s jobs protection and upskilling deal will help firms with a future keep people on – and protect the jobs and incomes of millions. And workers in companies taking longer to recover will get the skills they may need for future jobs.

“The deal isn’t a free ride for employers. Businesses that get help will have to pay a fair rate of tax in the UK, pay their staff fairly and treat them well.

“Working people carried the burden of the pandemic,” O’Grady went on to say. “They must not bear the brunt of this recession too. Protecting decent jobs with fair pay is how we recover.”

Follow the lead of European countries

The latest calls for the government to extend and adapt the UK furlough scheme come as other countries in Europe have pledged to continue offering support for substantial periods of time.

While the UK government has said repeatedly it will not extend its furlough scheme after the end of October, when it is slated to close, the Germany government has just committed to extending its Kurzarbeit wage protection scheme until the end 2021. Meanwhile, in France, a new short-time working scheme is set to be in place until June 2022, and in Austria, their short-time working scheme will be extended for at least another six months from October.

A new survey by pollster Survation commissioned by Unite last week revealed that the British publicly overwhelmingly wants the UK government to follow the lead of other European nations which have committed to long-term support to weather an unprecedented economic storm.

The poll of more than 1,000 working adults showed that nearly half – 49 per cent – want the government to extend the furlough scheme for at least another year, while a strong majority – 60 per cent – of adults aged 18-54 likewise want the scheme extended for an extra year, demonstrating that a majority of the UK’s workforce want continued government wage support.

Support for extending the furlough scheme was greatest in the South, where 49 per cent of working adults called for an extension and in London, where 57 per cent support an extension.

Unite general secretary Len McCluskey explained why an urgent extension of the furlough scheme was so vital now.

“The extension of the scheme would calm nerves and put a solid floor under an economy that is braced for a certain storm this autumn,” he said.

“Despite Germany’s relatively optimistic economic outlook, Angela Merkel has extended her country’s version of the job retention scheme to further boost economic growth,” McCluksey added. “Other European countries including France, Spain and Italy have or are going to do the same. We urge Boris Johnston to show support for Britain’s workers and follow suit.

“We are only asking the government does for its citizens what nations across Europe are doing, which is to take action to prevent vital industries and jobs from going into a tailspin and to ensure communities are able to weather the worst impacts of the pandemic.

 “The workers of this country expect the UK government now to do the same.”

By Hajera Blagg