Speaking to BBC News the UK Chancellor Rishi Sunak said that due to the COVID-19 pandemic, there will be extension until October this year for the UK scheme to pay wages of workers who are on leave. The extension of the scheme is called the Coronavirus Job Retention Scheme.
Currently, it has cost £14 billion ($24.4 billion) per month to finance the wage scheme which covered for a quarter of the workforce of around 7.5 million people.
Workers will continue to be paid 80 per cent of their monthly wages up to £2,500 (S$4,350), as confirmed by Mr Sunak. He added that the state will request companies to “start sharing” the cost of the scheme starting from August.
From August, for all sectors and regions, the scheme would continue but with better flexibility to assist the transition back to work, Mr Sunak explained.
Employers utilising the scheme right now can eventually bring furloughed employees back as part-time workers.
Mr Sunak has said that he will slowly strive to reduce the cost of subsidy to the taxpayer, but full details are still being finalised. However, the Treasury still expects to be paying more than half the costs between August and Octoner, according to sources that spoke to the BBC.
Earlier on Tuesday (12 May), Mr Sunak told BBC that the number of job losses “breaks my heart” and he is “working night and day to limit the amount of job losses.”
Addressing the Commons, the Chancellor stated: “I’m extending the scheme because I won’t give up on the people who rely on it.”
He also assured the support towards the people: “Our message today is simple: we stood behind Britain’s workers and businesses as we came into this crisis, and we will stand behind them as we come through the other side.”
Although the cost of the scheme has fuelled concerns, Mr Sunak clarified last week that it could not continue the way it is now. He added that to avoid a so-called “cliff edge” where employers resort to mass redundancies, he was under pressure to announce changes soon.
Before the furlough scheme ends in June, 18 May was the last date for companies to start the process of running 45-day consultation if they want to slash more than 100 jobs.
Concerns by some people of employees being “addicted” to furlough if it was extended was rejected by Mr Sunak.
“Nobody who is on the furlough scheme wants to be on this scheme. People up and down this country believe in the dignity of their work, going to work, providing for their families, it’s not their fault their business has been asked to close or asked to stay at home,” he reminded.
Echoing a similar sentiment, the changes are generally welcomed by Shadow chancellor Anneliese Dodds who said that things are “at least we are moving in the right direction”. However, the “big elephant in the room” is the concern of what the state’s employer contribution will involve, being that the “critical point” of the matter is “any changes to the scheme must not result in any spike in unemployment”, she stressed.
Patrick Langmaid, who is Director of Mother Ivey’s Bay Holiday Park near Padstow in Cornwall, told the BBC that the extension of the furlough scheme would still make it unlikely that he would stop making people redundant from his holiday park.
Nine of his workers are still working whereas seven workers have been furloughed. The few staff employed seasonally have also been let go.
On the other hand, the extension is welcomed by mainly businesses. The British Chambers of Commerce, a business group stated that employers and workers would have “significant relief” through the scheme.
By October, the scheme will have amounted to almost £100 billion, according to the estimates by Paul Johnson, who is the Director of the Institute of Fiscal Studies economic think tank. Around a total of 935,000 businesses registered for the scheme.
Looking at the facebook page of BBC News, there comments of all kinds posted by users. There are those that are glad that the furlough is extended as income still rolls in despite the leave from work. Others point out that it is not by choice that they are now unable to work, so losing a source of income when they truly want to earn is something beyond their control. Thus, the furlough extension will prove to be helpful for these people who may be facing financial hardship during this pandemic.
On the other hand, amidst the warm welcome of the furlough extension. For instance, Sammie Hilton and Thomas Gilbeert also highlight a lateral issue of the frontliners getting a pay rise during this critical time as people are giving flak about the matter. People are upset that they are out of work without income and that frontliners are instead getting a bonus. This feeds into the furlough situation where workers are getting paid but without doing any work.