UK Markets closed

New job support scheme needed or UK faces unemployment ‘tsunami’, TUC warns

Ben Chapman
·3-min read

The government has been urged not to “throw away” the good work of the furlough scheme by abruptly ending support and allowing millions of people to lose their jobs in the coming months.

Instead ministers must prevent a “tsunami” of unemployment by targeting funds towards protecting jobs and retraining workers to develop new skills, the Trades Union Congress said.

Viable businesses would be given financial help under the plans but, unlike the furlough scheme, the new package would have “strings attached”.

Companies that can demonstrate they’ve been negatively impacted by the pandemic would receive public funds to top up the wages of workers who they keep on for a minimum number of hours. Money would be provided to train employees in the hours they aren’t at work.

Workers would receive 80 per cent of their salary for the hours they are not in work, including when they are training. The company would receive a 70 per cent subsidy from the government.

Currently, firms that have furloughed workers face a cliff edge when the job retention scheme ends and they must cover all of their wages.

Sectors that are still likely to be heavily affected by the pandemic such as the arts, entertainment and hospitality, have all warned that this will result in large-scale lay-offs.

That risks sucking billions of pounds of spending out of the wider economy, causing knock-on effects in other sectors and prolonging the recession, economists have said.

The government plans to soften the financial blow by paying companies £1,000 for each furloughed worker they keep on the pay roll until the end of January.

However, the Labour Party and others have warned that the one-off bonus is not enough and Rishi Sunak has admitted that much of the money will be paid to companies for staff they had planned to keep on anyway.

The TUC said the measures outlined in its “Job Protection and Upskilling Deal” would offer more targeted and flexible support than the government’s job retention bonus.

Firms would have to meet a series of criteria before being able to access support.

They would have to demonstrate they have been hit by coronavirus restrictions, that they pay their fair share of tax in the UK and pay staff fairly.

Under the plans, companies would not be able to pay dividends while using the scheme. Companies affected by local lockdowns would automatically qualify for help.

The TUC said the plan mirrors measures being taken across Europe.

In Austria, unions and employers have extended their coronavirus short-time work scheme for another six months from October.

In Germany, the country’s coronavirus short-time work scheme is expected to be extended until December 2021 and in France a new short-time work scheme has been introduced that will apply until June 2022.

Read more

Johnson refuses to extend furlough scheme, despite jobs warning

Mass unemployment will be the next problem to surprise Boris Johnson

Britain faces up to the prospect of mass unemployment

Sunak should replace the furlough scheme with this job-share plan

‘Significant redundancies’ loom for arts and entertainment sector