UK urged to extend job aid as redundancies loom

The British government has been urged by industry and union leaders to launch a new wage subsidy program to avoid a surge in unemployment as companies prepare for the furlough business support arrangement to come to an end next month.

The government’s Coronavirus Job Retention Scheme, in place since the nation’s lockdown due to the coronavirus outbreak, is gradually being scaled back and will soon be closed down entirely.

In an interview with the Financial Times, the boss of the Confederation of British Industry, Carolyn Fairbairn, urged ministers to extend business support measures ahead of the autumn budget, warning that a rush of redundancies was expected as soon as the middle of this month.

Fairbairn said: “The autumn is a watershed time. If we can grab that V-shaped recovery now with the right actions over the next two to three months, we have the opportunity heading into the new year feeling much more confident about the UK.”

According to the Bank of England, as many as 2.5 million people could lose their jobs by the end of 2020 as the furlough program is brought to an end.

Fairbairn said the program, which at its peak in May supported 9 million workers, had been a “lifesaver” for businesses but that more help was needed. She warned that a about a quarter of companies in retail, travel, hospitality and leisure were in danger of going bankrupt.

“Many companies will find that cliff edge very difficult to manage,” she said. “It’s too soon to pull business support away at the end of October.”

Politicians on all sides are pushing for the furlough program to be extended, with particular concern voiced for those industries hardest hit, and Chancellor of the Exchequer Rishi Sunak faces pressure to act.

Risk of another huge spike

The Labour Party’s Anneliese Dodds, the shadow chancellor, told The Telegraph newspaper that there was “still time for the chancellor to make his wage support programs more “flexible” and “targeted”. She said: “If he carries on with this one-size-fits-all approach, we risk another huge spike in unemployment this autumn.”

Unions have said a continentalstyle system of “short-time working” wage support, where companies receive a government subsidy for the hours a worker is away from their job, could be used in Britain, The Guardian reported.

Programs similar to this have been used in Germany, France and Austria and have been extended in recent months, according to the newspaper.

Frances O’Grady, the general secretary of the Trades Union Congress, said: “Working people carried the burden of the pandemic. They must not bear the brunt of this recession too. Protecting decent jobs with fair pay is how we recover.”