The U.K. has introduced a new measure against rising unemployment in the country as it effects an emergency package called Job Support Scheme which would replace the furlough scheme that is due to end in October.
While making the announcement on Thursday September 24, 2020, Rishi Sunak, the U.K. Finance Minister, said that the scheme would run for six months starting from November.
The scheme would add to the wages of employees who only work for few hours as a result of decrease in business demand. Also, it would help workers to keep their jobs rather than experiencing job losses.
The scheme which would majorly target all small and medium-sized businesses across the country, demands that employees would have to work for at least one-third of their normal working hours.
In an attempt to balance working hours and the usual pays, the government would increase wages that would only cover two-thirds of the pay.
Addressing the House of Common on Thursday, the Finance Minister said, “I can’t save every business, I can’t save every job, no Chancellor (of the Exchequer) could, but what we can and must do is deal with the real problems that businesses and employees are facing now.”
Apart from small and medium-sized businesses being the target of the scheme, the scheme could also be extended to eligible larger companies that may have experienced declines in their performance during the pandemic.
Due to the pandemic, about 80% of wages have been subsidized for about millions of workers who have been furloughed from work.
Meanwhile in July, the Minister confirmed that the wages subsidy rates would be cut as soon as the country began to relax its lockdown restrictions.
The program has therefore since offered a bonus program for businesses that brought their furloughed workers back to work.
Now, employers who have retained their workers on shorter hours are eligible for Job Support Scheme as well as the Jobs Retention Bonus.
However, in what seems like a sharp turn of event, the new surge in the cases of coronavirus forcing the government to introduce fresh restrictions could choke off businesses chance to hold back their workers especially those in hospitality industry.
This would pave ways for another round of unemployment in the fourth quarter, according to economists’ projection.
In addition, Sunak disclosed that there will be an extension of the 5% VAT rate through March 31, 2021.
He further stated that VAT bills would be deferred for businesses and that they would pay the bills over eleven smaller payments to prevent credit accumulation in the month of March.
Similarly, the government would help smaller businesses extend their government recovery loans for over a decade from six years and above. This would help small businesses reduce monthly repayments of the loans.