Chancellor Rishi Sunak is expected to reveal a series of measures aimed towards decreasing unemployment, later today in the House of Commons. The new plans are being set into motion to stem the wave of mass unemployment that is expected as the government furlough scheme winds up towards the end of next month.
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Prominent economists and political leaders have warned against the termination of the furlough scheme, which has been lauded as one of the most successful policy implementations during the pandemic. As per the latest HMRC figures, the scheme has thus far protected the livelihoods of over 9.6 million workers across the country. With additional lockdown measures recently announced, workers are expected to suffer even more job losses as employers struggle to cope with cash flow constraints.
Earlier this week, several politicians urged the Prime Minister to act quickly to curb the impact of these latest restrictions on businesses. Labour leader Sir Keir Starmer cited the examples of leading hospitality companies like Whitbread and JD Wetherspoon, which have announced widespread staff cuts, warning that the threat to employment was real.
"The CBI, the TUC, the Federation of Small Business, the British Chamber of Commerce and the Governor of the Bank of England are all calling on the PM to stop and rethink and don't withdraw furlough," Starmer said. Despite these warnings, the government has not announced any plans of extending the scheme.
Mr Sunak has been considering various options that will extend financial support towards employers and workers alike, helping them navigate the slowly recovering economy. The Prime Minister has said that the solutions being considered by Mr Sunak are "creative and imaginative". While the Treasury has declined to comment on any exact plans, possible ideas include measures similar to those implemented in countries like Germany and France.
In Germany, for example, employers reduce workers' hours, and the government pays them up to 80% of the money they would have lost as a result. Similarly, in France, "partial employment" has also been a long-standing system, in which employers are permitted to cut workers' hours by up to 40% for up to three years. Employees continue to receive almost their entire salary, with the government subsidising a portion of the cost.
Another suggestion from the CBI is a “top-up” scheme for wages, in which employees who work at least 50% of their regular hours can receive payment for the hours worked, plus two-thirds of the remaining payment for the lost hours, split between the government and the employer. The TUC also proposed a more generous version of the CBI’s plan, with employees working even more reduced hours, with a guaranteed 80% pay for the lost hours.
Mr Sunak has previously said that boosting employment numbers is his “number one priority”. He insists that people are eager to return to work and that these latest measures will focus on that goal, rather than endlessly extending the furlough scheme. Further details will follow after his official announcement today.