Categories: Curious?Economic NewsGovernment PolicyInflation and UnemploymentThe Labour Market

Rishi to the rescue: UK chancellor announces the new job support scheme

The UK chancellor, Rishi Sunak, has just announced the government’s latest scheme to save people’s jobs from the ongoing Coronavirus crisis.

With the job retention scheme set to end at the end of October, both employers and employees alike have been desperate to find out whether their jobs would continue to be protected as the UK is about to enter what could be a very harsh winter (and I’m not talking about the weather!).

Whilst it is a replacement for the job retention scheme, the job support scheme is very different. Firstly, there will be no more furlough. Rather than paying people’s wages, the government will now be supporting wages, but only for those people who are actually working.

Under the new scheme, a worker must work for at least 33% of their usual hours. These hours will then be paid for by their employer. The government will then contribute to the wages of those hours which the worker is not working, but under their contract usually would be. The government will pay for one third (33.3%) of the workers hours, the employer a further one third, with the final third being incurred as a loss to the worker.

Sound complicated? Probably! Check the graphic below…

The new scheme will put a lot of the financial burden back on the business, and in addition is only open to small and medium sized companies. Large companies will need to show that their total revenue has fallen by at least 33% due to Covid-19 in order to be eligible.

As a result, the cost to the government will be significantly less than the estimated £40 billion which has been spent on the job retention scheme since it was launched in March. According to the Chancellor, if 1 million workers were signed up for the new scheme it would cost around £300 million a month.

The immediate concern for this new scheme is for those jobs and industries which are still unable to operate at all. According to the new guidelines, a worker must be working for at least a third of their contracted hours in order to be eligible. That could put many workers in a very difficult position if they are actually unable to go into work in the first place.