A new emergency furlough scheme is projected to save only about 230,000 jobs.
Chancellor of the Exchequer Rishi Sunak’s emergency furlough scheme is predicted to save only 230,000 viable jobs, while nearly 2 million jobs will be slashed in November alone, according to a Mirror report.
The government and businesses will be allowed to continue boosting earnings for employees who have not been able to come back to work full time as a result of the pandemic’s restrictions.
The new emergency furlough scheme will allow workers to get three-quarters of their usual salaries for six months, the BBC reported.
Workers’ jobs may be affected after a mountain of measures were implemented to combat new COVID-19 cases.
Twelve percent of the U.K.’s employed workers, amounting to almost 3 million people, are on either partial or full furlough leave; the present furlough scheme is ending on 31 October.
The new emergency furlough scheme will commence on 1 November. Estimates say the scheme will cost the government about £300 million a month, according to the BBC.
The new emergency furlough scheme will pay workers to compensate for some of the hours lost, and it will apply to employees who are able to work at least a third of their usual hours.
Firms will continue to pay employees for the hours worked, but the government and employers will chip in to compensate workers for the hours they have lost.
The emergency furlough scheme will max out at £697.92 monthly, the BBC reported. All small and mid-sized firms will be eligible for the emergency furlough scheme, and big businesses may use it if they have faced significant turnover losses.
Businesses that are using the new emergency furlough scheme can still use the Job Retention Bonus, according to the BBC.
Sunak’s Job Retention Bonus offers to contribute £1,000 to businesses for every employee who keeps their job position, but loopholes may mean the scheme will only be beneficial to a small number of workers facing job losses.
Institute for Public Policy Research (IPPR), a progressive think tank in London, the said it is getting ready for another massive round of job cuts, regardless of the new emergency furlough scheme.
Predictions for job cuts in the final quarter of the year could push the U.K. unemployment rate up to 8.5%, according to Yahoo Money.
Both government furlough schemes do not make it advantageous enough for firms to conserve jobs right now, as businesses might determine the positions will return after restrictions have been relaxed.
While under the restrictions of the pandemic though, many firms might not find it cost-effective to preserve jobs, even with the emergency furlough scheme.
The chancellor can’t be expected to save every person’s job during the coronavirus pandemic, and a “readjustment of the economy will be required,” according to a Centre for Economic and Business Research blog post. “But as hopes for an early return to normal recede and it indeed looks like some businesses in Covid hotspots will need to close in the coming weeks and month, the Chancellor needs to act now despite the fiscal cost … .”
According to the IPPR, the emergency furlough scheme will not aid employees who are confronted with redundancy in spite of still working.
Designed to keep workers from facing redundancy, the emergency furlough scheme is only expected to assist a limited amount of workers who earn £625 and £987 monthly.
The Job Retention Bonus will remain active until 1 February.
The problem with the scheme is that workers who earn below the threshold will not qualify for the £1,000 incentive bonus to keep jobs.
The IPPR believes the scheme’s bonus of only £1,000 is also not enough for workers with higher salaries, so businesses will have to pay more to get the incentive money.
The IPPR predicts only 1 in 10 employees will benefit from the emergency furlough scheme.
The emergency furlough scheme will be reviewed in January, according to the BBC.
Do you think the emergency furlough scheme or the Job Retention Bonus will be beneficial enough to save workers’ jobs? Is there something better the government can implement? Share your opinion in the comments section below.
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