THIS week, Chancellor Rishi Sunak announced new measures with the stated aim of protecting jobs throughout the UK. The announcement is, of course, a welcome shift from the previous unworkable and unsustainable plan for a cliff-edge end to the furlough scheme but falls significantly short of the type of intervention required to provide meaningful security for workers struggling in the crisis.
The move comes as the UK reported the highest single-day Covid-19 figure since the outbreak began, with more than 400,000 people having contracted the virus thus far and over 40,000 people having lost their lives. While the virus itself may not discriminate, our economy does, meaning that structurally oppressed groups, like Black, Asian and Minority Ethnic people, have been disproportionately hit both by Covid-19 and the current financial hardship.
The sheer scale of the public health crisis has triggered a profound crisis in our economy, with the Bank of England warning that we could enter the deepest recession in 300 years. If there was ever a time for action from the UK Government to safeguard jobs and shield households and communities from the storm, it was now.
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Around 12% of the workforce across the UK are on some form of furlough leave. The new measures will see Government contribution to workers’ wages decline sharply when compared to the previous furlough scheme, which covered 80% of monthly salaries up to £2500. Under the new initiative announced by the Chancellor, this figure will drop to just 22%. Under the rebranded scheme, beginning November 1 and lasting for a period of six months, the UK Government will subsidise wages of some workers that are working at least a third of their normal hours.
But for many workers, this announcement is too little, too late, and pitfalls exist in the new proposal, which will inevitably result in workers, and sectors, falling through the cracks again. There is first the issue of the timing of the announcement. We are navigating a period of immense upheaval in our labour market. Had we not faced months of uncertainty – heightened massively by the previous proposal of a cliff-edge end to the furlough scheme – vast swathes of workers who have recently been made redundant would still have a wage.
Secondly, there is the matter of protecting incomes. Under the new scheme, eligible employees working 33% of their hours will receive at least 77% of their pay. This still results in a significant drop in income for many using the scheme. The move follows years of hardship for workers, who faced a 17-year wage squeeze – the worst in 200 years – compounded by a decade of austerity. The pay disparity also shines a light on broader imbalances in our economy, particularly when comparing the insecurity of those making a living through work and the relative security of the rentier class. It is estimated, for example, that up to 45% of the net cost of the furlough scheme will be spent on rent and debt repayments.
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The new scheme has furthermore come under fire for failing to provide the adequate incentives needed for employers to provide security. As the Resolution Foundation notes, the “decision to require employers to contribute half of the costs of the scheme means that while some firms will wish to use it to retain workers because of high recruitment/training costs, it is not well designed to encourage firms to cut hours rather than jobs”. This, they say, is particularly prevalent in the low-wage, high-employment sectors, such as hospitality and leisure, which are at the sharp end of the unemployment crisis. The new initiative also says little about sectors that have remained shut in the face of the public health crisis, like, for example, significant proportions of the performing arts industry.
What we need to see now from this government is a shift away from short-term thinking, and towards providing meaningful security and a planned recovery strategy where the government is actively involved in creating decent, high-paid, secure, unionised employment opportunities the length and breadth of the UK. To initiate this, we urgently need to see this government rallying behind the largest green stimulus package possible, taking advantage of historically low borrowing costs, to incentivise jobs that marry the twin goals of economic and climate justice through, for example, a national retrofitting programme, meaningful investment in our hollowed out social security system, a national care service and nature restoration.
The road ahead will be challenging with the intertwined crises we face, but as with so many aspects of this crisis, it has served to expose deep fault lines in our economy that long predate it. That address them, we need a transformative shift in how our economy operates and in whose interest it operates in. Setting out a roadmap for secure and sustainable jobs can provide a first step to building this.
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Callum Baird, Editor of The National
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