Labour has warned of a bleak Christmas for the hospitality sector because the Chancellor’s new job support scheme will not offer enough financial aid or sufficiently incentivise short-hours working.
New analysis by the party has revealed that under the programme, employing two bar or restaurant managers part-time would cost £2,647 a month, compared to £1,973 a month to have one full-time staffer.
The costs to employers – including wages, National Insurance and employer contributions to non-working hours – mean firms would pay over £4,000 for each job they saved under the new six-month scheme.
Commenting on the new data, Shadow Business Secretary Ed Miliband said: “The government presents the job support scheme as a measure that will save jobs. But the facts tell a different story.
“Struggling employers where work has reduced have zero incentive to keep staff on, with it still being significantly cheaper to sack one out of every two members of staff.
“Businesses won’t want to do this but the government is stacking the odds so it makes financial sense for them to do so. They’re essentially having to flip a coin to decide which person to lay off.
“The hospitality sector is already at huge risk of redundancies, operating at reduced capacity and on a shrunken income, hit by a 10pm curfew, and approaching a bleak Christmas season.
“Ultimately, the government has decided to accept mass unemployment in certain sectors – they have decided it is a price worth paying. It is the wrong choice for business, workers and our whole economy and society.”
Labour has pointed out that the job retention bonus, a separate scheme that provides a monetary incentive for businesses to retain staff, will have little to no effect on potential job losses.
The extra £1,000 given to businesses for keeping on two staff members is a fraction of the thousands of pounds of extra costs and will only be paid at the end of January 2021 – too late for many struggling firms.
Chancellor Rishi Sunak announced the new job support scheme in parliament last week as part of his winter economic plan. The programme will serve as a replacement for the job retention scheme.
The scheme will see employees who work at least one third of their normal hours have their worked hours paid by their employer and their hours not worked paid jointly by the government and their employer.
Labour welcomed the “U-turn” on replacing furlough but has highlighted flaws in the policy. Designed to only protect “viable jobs”, it does not offer specific help for sectors such as hospitality.
Anneliese Dodds wrote to her counterpart Sunak on Tuesday to highlight seven ways that the winter plan “fails Britain’s workers”. She accused the Chancellor of returning to Margaret Thatcher’s “sink or swim” jobs mentality.
Labour predicted earlier this week that as many as three million employees from small and medium-sized businesses who have been furloughed could be at risk of losing their jobs from next month.