British chancellor Rishi Sunak has said the government will cover a third of workers’ wages under a new coronavirus Job Support Scheme that will replace the furlough initiative.
The furlough scheme, which has been accessed by countless film and television companies in the UK, will be closed at the end of October and Sunak has come under pressure to set out fresh support for employees as a second wave of Covid-19 washes through the country.
Under the new six-month jobs scheme launching in November, the government will target support at employees who are working at least a third of their contracted hours. For the remaining hours not worked, the government and the employer will each pay a third of the member of staff’s salary.
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The Treasury said someone who works 33% of their hours would get 77% of their wages, with the support capped at £697.92 ($888.38) a month. The scheme, which is similar to an initiative in Germany, was welcomed by employers, but it is a significant step down from the furlough scheme, under which the government covered 80% of wages.
From 1 November, for the next six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. pic.twitter.com/8NpIKpQV8y
— HM Treasury (@hmtreasury) September 24, 2020
Speaking in Parliament, Sunak explained: “First, it will support viable jobs. To make sure of that employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours, and the employee will keep their job.”
He added: “Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible but larger businesses only when their turnover has fallen through the crisis. Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme. The scheme will run for six months starting in November and employers retaining furloughed staff on shorter hours can claim both the jobs support scheme and the jobs retention bonus.”
The Job Support Scheme is designed to smooth a path out of furlough, but Sunak warned “I cannot save every business, I cannot save every job” amid the economic crisis caused by coronavirus.