More than 1m people will completely fall through the cracks of chancellor Rishi Sunak’s post-furlough scheme which was announced last week, a new analysis has shown.
In his announcement to the Commons on Thursday (September 24) Sunak emphasised the new short-time working scheme, called the jobs support scheme or JSS, will only support those whose jobs the government considers ‘viable’.
“To make sure of that, employees must work at least a third of their normal hours and be paid for that work as normal by their employer,” Sunak told MPs when first announcing the scheme.
Under the new scheme, for the hours that these workers are not in work, Sunak explained, the government will pay a third of their normal pay, while the employer will also contribute a third.
Including the time they are in work, under the new scheme workers will, according to the Treasury, receive 77 per cent of their normal pay overall.
Effective from November 1, the JSS will run for six months.
‘Insult to injury’
While many welcomed the fact that the chancellor took action after he came under intense pressure to devise a new scheme to succeed current furlough arrangements due to end on October 31, a new analysis from Labour shows just how many people will be left out in the cold.
Many sectors are dominated by jobs were working a third of normal hours is virtually impossible because of local and national restrictions that will likely be imposed for months to come, Labour highlighted.
These include the events and conference industry, where 142,000 events catering jobs are at risk, in addition to 11,000 exhibition organising jobs and 18,000 conference running jobs.
The creative, arts and entertainment sector, also dominated by jobs where for a majority, working a third of normal hours is impossible, has 90,000 jobs at risk, while the sports sector will largely also not be able to benefit from the new scheme, imperiling 369,000 jobs.
The wedding sector has been especially hard hit by the pandemic – and faces even tougher times ahead after new restrictions have limited the number of guests at weddings from 30 to 15.
The wedding industry as a whole has already lost more than £4bn since the pandemic started, with more than 100,000 weddings postponed until at least next year. The new restrictions are estimated to impact at least 70,000 weddings this year.
Meanwhile, the nightlife sector, which includes nightclubs, casinos, bars and pubs, faces a similarly bleak future. Labour highlighted a survey from the Night Time Industries Association, an industry body representing more than 1,000 different employers, where 80 per cent of respondents said they planned to lay off staff when the current furlough scheme ends on October 31.
According to Labour, there are 69,000 people employed in nightclubs, which have still not reopened since the first national lockdown. There are an additional 428,000 people whose jobs are at risk in pubs and bars, which will be heavily impacted by the new 10pm curfew.
The nightlife sector alone is the UK’s fifth biggest sector, accounting for 8 per cent of all employment and bringing massive revenues to the tune of £66bn each year.
Commenting on Labour’s latest analysis, shadow minister for business and consumers Lucy Powell said, “The chancellor is consigning whole sectors of our economy to the scrapheap, damaging lives and livelihoods, and threatening the recovery. The failure of ministers to ensure an effective test, track and trace system means that many businesses have no idea when they can reopen. The decision to shut these firms out of the job support scheme adds insult to injury.
“Even for those who can access it, the job support scheme is badly designed and could lead to a wave of job losses, because the chancellor’s sums do not add up for businesses,” Powell added. “He must think again, before the jobs crisis reaches tipping point.”
‘Too late for too many’
It is understood that Sunak’s new scheme will mostly benefit jobs that are highly skilled because it would cost employers too much to make people redundant and leave a skills gap that they would struggle to fill later.
But as the Resolution Foundation highlighted last week, “The decision to require employers to contribute half of the costs of the scheme means that while some firms will wish to use it to retain workers because of high recruitment/training costs, it is not well designed to encourage firms to cut hours rather than jobs. This is particularly true in the low wage, high employment sectors like hospitality and leisure that are at the centre of the unemployment crisis we face.”
In other words, for many employers, it is simply more cost-effective to retain one worker full-time, than two workers part-time under the chancellor’s new scheme.
Unite general secretary Len McCluskey also expressed deep concern that the new JSS has not gone far enough to stem a rising tide of job losses.
He said that “it may come too late for far too many and leaves gaps that could see millions more facing poverty and joblessness in the coming weeks”.
McCluskey added that the new scheme “cannot be the last word from the government on the defence of people’s livelihoods. We have seen a summer of jobs destruction but an absence of jobs creation. We urge the government to work with us as we put our collective shoulders to the wheel in the task of recovering the economy, because the spectre of mass unemployment still stalks our communities.
“Industries teetering on the cliff edge like aviation, retail and hospitality, where jobs are being lost hand over fist and where the impact of this crisis continues to be devastating, will need further support,” McCluskey went on to say.
“Dismissing jobs in these sectors as not viable is to leave communities to rot and descend into a jobs wastelands, so we are determined to continue to fight for better and wider support for these workers.
“We urge the chancellor to keep the unemployment situation under constant review and pledge to act swiftly should the measures announced today not have the desired effect of holding back a tide of job losses and poverty.”
By Hajera Blagg