TUC warns government not to “throw away” good work of furlough scheme

The TUC has told the government not to risk a “tsunami of unemployment” when it ends the job retention scheme in October, as the union body launched its own blueprint for saving jobs and retraining workers affected by coronavirus.

The ‘job protection and upskilling deal’ being proposed would offer subsidies of up to 70% of participating companies’ pay and overhead costs to bring back workers from the job retention scheme.

If employees were brought back for less than 50% of their normal hours, the government would also fund retraining so that they could transition into industries less impacted by the pandemic.

Nearly ten million people are on furlough as part of the job retention scheme and think tanks have predicted ‘Great Depression’ levels of unemployment, with 2.5m jobs at risk when the programme ends in the autumn.

The TUC says its follow-on policy would offer more “targeted” support than furlough by adding conditions to the financial assistance offered by the government.

Companies would have to prove that they had been significantly affected by Covid-19 restrictions, were bringing back workers for a significant number of shifts and were paying their share of income tax, to receive support.

TUC general secretary Frances O’Grady said: “The job retention scheme showed what the government can do during a crisis. It saved many people from the dole queue and stopped good companies going to the wall.

“Ministers cannot afford to throw away the good work of the job retention scheme. There is still time to avoid a tsunami of unemployment.

“The TUC’s jobs protection and upskilling deal will help firms with a future keep people on – and protect the jobs and incomes of millions. And workers in companies taking longer to recover will get the skills they may need for future jobs.

“The deal isn’t a free ride for employers. Businesses that get help will have to pay a fair rate of tax in the UK, pay their staff fairly and treat them well.

“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.”

The TUC policy mirrors actions taken elsewhere in Europe, where countries such as France, Austria and Germany have all extended their own short-term work schemes beyond 2020.

Germany’s ‘Kurzarbeit’ short-term work programme that provides an income “replacement rate” of 60% for lost work time has helped the country save 1.5 million jobs during the pandemic.

A similar scheme during the financial crash allowed Germany to be the only G7 country not to experience a fall in employment in 2009.

Labour has described ending the job retention scheme for every industry simultaneously a “historic mistake” when many otherwise healthy sectors, such as manufacturing or aviation, are still not operating at full capacity.

Responding to the TUC report, Shadow Chancellor Anneliese Dodds said: “Labour has repeatedly warned that the Chancellor’s one-size-fits-all withdrawal of wage support across the economy risks plunging the country deeper into a jobs crisis this autumn.

“With businesses, trade unions and the devolved governments in Wales, Scotland and Northern Ireland also sounding the alarm, it’s time the Chancellor took his fingers out of his ears and started listening.

“There are plenty of ideas and examples out there – from other countries, from think tanks and trade unions here in the UK – that show it’s possible to adapt support schemes to changing circumstances.

“There’s no room for stubbornness in a crisis like this. The Chancellor needs to think creatively, show flexibility and target support to protect jobs in the hardest-hit sectors.”

Shadow Chancellor Anneliese Dodds has called for the job retention scheme to be extended in the UK’s worst-hit sectors and for a £1.7bn fund to prevent companies from closing down to be set up.