Business leaders and unions have joined forces to urge the British government to keep the wage subsidy program that is set to take off in the coming months
LONDON – Business leaders and unions joined forces on Thursday to urge the British government to maintain a wage subsidy programme, which is closing in on the coming months – or else see a sharp rise in unemployment.
The Job Retention Scheme was introduced last March at the start of the pandemic to ensure that unemployment does not rise substantially when lockdown restrictions are in place. Under the programme, the government paid 80% of the wages of workers who were unable to work due to the lockdown measures.
The program helped support more than 11 million people, but the number now hovers around 2 million as many sectors reopen, particularly hospitality. This kept a lid on unemployment, which is relatively low, at around 5%.
On Thursday, that support began to be phased out, with employees still to take 10% of the bill. More tapings are due in the coming months before the plan ends in September.
Treasury chief Rishi Sunak said, “Our plan for jobs has supported people’s jobs and livelihoods during the pandemic and it is wonderful to see that with our restaurants, pubs and shops so many people have come on vacation and returned to their workplaces. I have come.”
However, there is a growing demand from the government to keep the scheme for as long as possible.
The British government is hoping to lift all remaining restrictions on social contact in England on 19 July, but a recent sharp rise in infections has raised concerns about whether this should happen, when many people still have access to the vaccine. At least one dose has to be received. Other parts of the UK – Scotland, Wales and Northern Ireland – are taking similar steps out of lockdown.
“Until we take the final step in the road map, the tapering of government payments into the furlough scheme should be deferred immediately,” said Shewan Haviland, director general of the British Chambers of Commerce.
Some businesses, such as nightclubs and many theatres, for example, are still unable to open their doors due to delays in reopening plans for England.
“The country has invested billions to keep working people ready for recovery, but if ministers ‘pull the rug’ under businesses, jobs will be lost very soon,” said Unite union assistant secretary general Steve Turner.
The reopening of the British economy has helped it rapidly recover from the deepest recession in 300 years. Inflation has also increased as increased demand created during the pandemic increases cost pressures in the economy.
Bank of England Governor Andrew Bailey warned on Thursday that while inflation in the UK is set to remain above target, it is likely to be a temporary phenomenon, partly from wealthy families spending the money saved during the pandemic. joined.
The most recent data showed an annual rate of inflation of 2.1% in the UK following a massive increase in energy prices. The bank’s primary objective is to keep inflation at 2%, but it has often let it go higher if it considers a rise in prices as a result of temporary factors.
“It is entirely possible that we will see additional demand for a temporary period of time, or what we might commonly describe as ‘bottlenecks’,” he said in a speech in London. “There are good reasons to interpret this as a temporary feature, but we should be on the lookout for the risk that these features may persist.”
At the start of the pandemic, the bank slashed its main interest rate to a record low of 0.!% and pumped hundreds of billions of pounds into the economy to keep money flowing during the stress of the pandemic.