German-style wage subsidies could replace the government’s furlough scheme as part of wider emergency support measures to help businesses through a second wave of Covid-19.
The Treasury has reportedly been consulting on options for the end of the Coronavirus Job Retention Scheme which is due to finish on October 31.
An announcement timed for today (Wednesday) that would have extended the availability of state-backed loan schemes for struggling companies has been delayed.
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It is thought that chancellor Rishi Sunak made the postponement to draw up a wider package of support after prime minister Boris Johnson confirmed new restrictions to limit the spread of Covid-19 over the winter.
One option believed to be under consideration after talks with businesses and unions in recent weeks is a scheme similar to the German ‘short work’ or Kurzarbeit system, involving the government paying the wages of workers for short-time working, according to The Guardian.
Companies would pay staff for the time they are at work, while the Treasury would cover part of their wages for time when they have no work under the suggested proposals.
The Treasury reportedly favours a plan where workers would have to undertake education or training while they are away from their work, in a quid-pro-quo for companies receiving continued state support.
Germany extended its furlough wage subsidy scheme from 12 to 24 months in August against a backdrop of rising job losses, including cuts imposed by Lufthansa.
The speculation came as Bank of England governor Andrew Bailey suggested specific sectors may benefit from further help.
His comments followed Premier Inn owner Whitbread announcing 6,000 job cuts and Tui confirming 8,000 positions at risk across Europe as it seeks to cut annual costs by 30%.
And Hays Travel joint owner Irene Hays warned that the impact of the ending of the furlough scheme on the wider travel industry will be “really significant” and the agency group was working o the basis of no further government support.
Although no final decisions have yet been made by the chancellor and the Treasury has declined to comment, Johnson told MPs on Tuesday that he recognised there were further demands for economic support.
“I know that my right honourable friend the chancellor will be applying, as I say, his imagination and his creativity to helping those sectors in the months ahead,” he said.
“But the best thing for them is to get back to life as close to normal as possible by getting this virus down and that is the point of the package of measures that we are announcing today.”
One industry source told The Guardian that the Treasury was racing to announce a fresh package of support before a deadline next week when businesses are likely to start cutting jobs to coincide with the end of the furlough scheme.
There is no time limit for how long the period of consultation on redundancy should be, but the minimum is 20 to 99 redundancies – the consultation must start at least 30 days before any dismissals take effect. With 100 or more redundancies, the consultation must start at least 45 days before any dismissals take effect.
Unite union general secretary Len McCluskey urged the government to extend the jobs retention scheme and financial support, targeting sectors such as aerospace, aviation and hospitality.
He said: “It is now veering on the irresponsible for the government to remain silent and stubborn on the prospect of assistance for jobs and the economy.
“The prime minister was also flat out wrong about the UK government doing more to protect jobs than its opposite numbers in France and Germany.
“Weeks ago, those governments extended their jobs protection programmes, giving their workers relief from the fear of redundancy. Disgracefully, this government has given no such security to the workers of the UK.
“The prime minister has made it clear to the country that new restrictions on our lives are with us until next spring. These measures must surely then be accompanied by the support that sectors of the economy facing ruin are crying out for.”
Responding to the new restrictions announcd by Johnson, World Travel & Tourism Council president and chief executive Gloria Guevara said: “Public health is paramount and we fully support the UK government’s latest announcement which aims to curb a second spike of the virus.
“However, these latest measures will also come as a huge disappointment to the hard-pressed hospitality industry, just as it had begun to recover.
“Tens of thousands of smaller businesses and SMEs, such as cafes, taxis, restaurants, bars and office support services, across the country rely upon commuters for their business and livelihoods.
“So, while the government’s measures should have an impact in terms of slowing down the virus, asking people to work from home will immediately impact jobs, causing further damage and setback to the UK’s fragile economic recovery.”
She added: “While we are also encouraged that the wearing of face masks is being taken more seriously, WTTC believes the time has come for the government to make the wearing of face masks mandatory – both inside and outside where social distancing is not possible.
“We must learn from the health experts and the medical evidence available, which shows that wearing face masks provides the highest level of protection against transmission at 82%.
“We all have to accept our responsibility to protect not only ourselves but those around us who may be vulnerable to the virus.”
More: Prime minister urged to act on furlough replacement
End of furlough could trigger industry-wide jobs hit, warn Hays Travel owners
