Short-time working scheme in the offing?
Chancellor Rishi Sunak may soon bow to union pressure and announce new wage support scheme
Chancellor Rishi Sunak may imminently bow to pressure from Unite and other unions, after it emerged this week that he is reportedly weighing up plans to introduce a Germany-style short-time working scheme to replace current furlough arrangements.
Sources told The Guardian last night (September 22) that the Treasury has decided to delay an announcement planned today (September 23) to extend state-backed loan schemes, suggesting that there may be a more wide-ranging package of support for workers and businesses to be unveiled soon.
Foreign secretary Dominic Raab further hinted this morning that an extension of the furlough scheme in modified form may be imminent.
Speaking to Sky News, Raab said, “The Chancellor keeps all this under constant review, not just economy wide, but specific sectors. I don’t think the Chancellor is minded to wholesale extend the furlough scheme [but] we are looking at targeted measures.”
Prime minister Boris Johnson himself also strongly hinted that the chancellor would announce a new package of support for workers and businesses soon.
He told the Commons today (September 23) at Prime Minister’s Questions, “We are looking at a massive package of investment in jobs and growth in the short, medium and long term. In addition to the package I set out yesterday, there will be creative and imaginative measures from the chancellor to help people through this crisis.”
The news that the government may introduce a short-time working scheme comes just weeks after Unite launched an SOS for Jobs campaign calling for precisely that.
‘Working behind the scenes’
It is understood that the Treasury is attracted to a scheme similar to Germany’s Kurzarbeit scheme, where the state covers part of people’s wages when they cannot work, and companies pay wages for the hours their staff can work.
Such a scheme is very similar to what the TUC proposed last month. In the TUC’s proposals, 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 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.
Sources told the Guardian that the Treasury was especially drawn to such a plan where workers would undertake training while not in work in exchange for government support.
The Financial Times moreover reported that Sunak met with both leaders of the Confederation of British Industry (CBI) and the TUC last week to discuss different options post-furlough.
“We are working with them behind the scenes,” a government official told the FT.
Clock ticking down to furlough scheme end
Indications that the chancellor could very soon announce a new package of wage support comes as the clock is ticking down to the end of the current furlough scheme on October 31, which many fear could precipitate a massive raft of job losses.
Former Pizza Express boss Luke Johnson was among those who most recently expressed concern about the furlough scheme’s impending closure.
Speaking to BBC Newsnight last night, he said that if the scheme were to end with nothing to replace it, “of the 3m [currently on furlough] at least a million, maybe more, will be made redundant”.
Pressure on the chancellor to act soon mounts days before October 1, a date when many employers may decide to cut jobs if there is no furlough scheme extension. This is because employers planning to make fewer than 100 redundancies must run a 30-day consultation by law, and so October 1 would be the last day they could begin consultation if they plan to cut jobs when the furlough scheme ends on October 31.
Already, hospitality firm Whitbread, which owns Premier Inn and Beefeater, announced an astonishing 6,000 job losses on Tuesday (September 22).
On Wednesday (September 23), Labour’s shadow business secretary Ed Miliband urged the government to make clear its post-furlough plans urgently.
“Businesses are already having to contribute to the costs of furlough, putting jobs at risk, and we are now perilously close to the furlough cliff-edge,” he said.
“Labour has outlined an alternative – the job recovery scheme,” he added. “This would enable businesses in key sectors to bring back staff on reduced hours with government backing wages for the rest of the working week, saving jobs and giving businesses the certainty they need.
“The government must urgently outline today the measures they will take to prevent mass unemployment. They must not delay any further because businesses will be taking decisions in the coming days about what their response will be. They need to know that the government will stand behind them.”
Former prime minister Gordon Brown also called on the government to act “within days” in his speech to Labour’s online conference on Tuesday (September 22), as he called on everyone to get behind his Alliance for Full Employment (AFFE), formed by Brown, the elected metro mayors in England, the First Minister of Wales, and the Mayor of Bristol.
Among the AFFE’s aims is to push the government to urgently extend the furlough scheme and moreover adopt a range of measures to aid long-term economic recovery post-pandemic.
Brown outlined new figures that have shown the odds of finding a job now are the worst in 50 years, as thousands of people apply for a shrinking number of posts now available.
In Birmingham, 15,000 people applied for 10 assembly operative jobs, while more than 4,000 people applied for a single paralegal position in London. Also in London, about 1,000 people applied for the role of a receptionist at a restaurant in the capital.
“You’re almost as likely to win the National Lottery as this jobs lottery,” Brown said in his speech. “This is not the levelling up that we were promised.”
Commenting on the shocking figures of huge numbers of people chasing a vanishingly smaller number of jobs, Unite general secretary Len McCluskey said, “We are staring the danger of mass unemployment in the face and only urgent Government action can prevent a jobs catastrophe. I urge ministers to act on the AFFE agenda without delay.”
Turning to news that a successor to the furlough scheme may be imminent, McCluskey added, “With the prime minister’s comments in the Commons today and reports that the chancellor is considering a wage subsidy scheme, finally we have a glimmer of hope for the many thousands of workers who face losing their jobs over the coming weeks.
“But there cannot be any further delay,” he said. “Thousands of jobs hang by a thread in sectors such as aviation, aerospace, automotive and hospitality which continue to be hard hit by this pandemic.
“People face the terrible prospect of losing their jobs and their homes because of this government’s stubborn inaction; the chancellor must step in now to prevent a level of human misery and mass unemployment not seen for 40 years,” he went on to say.
“The vast majority of other European countries have already adopted similar wage subsidy and the UK needs to follow suit before it is too late.
“It did the right thing before with the jobs retention scheme and must rediscover those instincts decisively and swiftly or it will never be forgiven by working people.”
By Hajera Blagg