Job Retention Bonus not 'enough' to stop mass unemployment

The Job Retention Bonus which rewards employers with £1,000 for every worker they bring back from furlough until January 2021 is not “enough to stop millions of people losing their livelihoods”.

This is the opinion of the Trades Union Congress (TUC), who believe it is “clear” that the Job Retention Bonus will not stop a “tsunami of unemployment” in the Autumn. The Chancellor of the Exchequer, Rishi Sunak, announced the Job Retention Bonus during his summer statement.

The TUC admit that the coronavirus Job Retention Scheme (JRS) “has done vital work protecting jobs” and supported 9.6 million workers. However, once the furlough system ends in October, there is a fear of a surge in unemployment. The National Institute of Economic and Social Research (NIESR), an independent economic research institute believes closing the furlough scheme at the end of October could result in unemployment reaching 10 per cent this year.

To avoid this, the TUC believes the Chancellor should follow in the footsteps of certain European countries like Germany, France and Austria who have either extended their support to the job market or created a new form of relief for employees during the pandemic.  Thus, the TUC have put together the New Jobs Protection and Upskilling Plan which urges the Government to help those at risk of losing their job to develop new skills that they will need in the future. It also notes that younger employees face bigger disadvantages at times like this, and so developing new skills is essential.

The Plan also focuses on new short-time working being offered to workers to help reduce the risk of huge unemployment levels. Short-time working is when a staff member agrees to work for reduced hours and pay.

The TUC Job Retention Deal recommendations are:

  • Government should require businesses to demonstrate they have been hit by coronavirus restrictions to qualify for the Jobs Retention Deal.
  • Businesses hit by local lockdowns would automatically qualify for the scheme.
  • The scheme should require workers to be working for a minimum proportion of their normal hours.
  • The scheme should support workers who cannot work because they are in the group previously told to shield or who have caring responsibilities that mean they cannot work.
  • Similar support should be put in place for the self-employed, including those who have lost out on previous support.
  • Workers should continue to receive at least 80 percent of their pay for the time they are not working.
  • Workers earning the national minimum wage should receive 100 percent of their normal pay.
  • Any worker working less than 50 per cent of their normal working time must be offered funded training.
  • Businesses accessing the scheme must set out Fair Pay Plans.
  • Businesses that access support should set out a plan for decent jobs.
  • Businesses that access support should pay their Corporation Tax in the UK.
  • Businesses accessing the scheme should commit to keep people in work and not pay dividends while using the scheme.

Frances O’Grady, the general secretary of the TUC, said:

Ministers cannot afford to throw away the good work of the [furlough] job retention scheme. There is still time to avoid a tsunami of unemployment.

Working people carried the burden of the pandemic. They must not bear the brunt of this recession too. Protecting decent jobs with fair pay is how we recover.

Ben Willmott, head of policy at the CIPD, said:

The sort of short-time working scheme proposed by the TUC has a proven track record of supporting employment in other countries and could help employers hardest hit by COVID-19 to continue to minimise redundancies, particularly in the event of significant local outbreaks or a full blown national second wave over the winter.

The focus on upskilling is also crucial at this time but many workers who would fall outside the remit of the TUC’s proposed scheme also need support to train so we think that it would make more sense to significantly expand the National Retraining Scheme for this purpose.