Rishi Sunak eyes subsidising wages of part-time workers

Government would cover one third of wages for staff on days they are not working, based on proposed CBI scheme

Rishi Sunak is eyeing replacing furlough with subsidising wages of workers who work on a part-time basis.

The idea is one of several being considered by the chancellor and his Treasury, according to the Financial Times.

The attraction of subsidising wages is that it would support those who are in work but with not enough demand to keep them on five days a week.

>See also: Boris must ‘act now’ to save businesses from going under

The scheme would be aimed at businesses who can afford to employ staff for at least 50 per cent of their normal hours.

The Confederation of British Industry (CBI) and the Trades Union Congress (TUC) have both proposed similar schemes to replace furlough when it ends next month.

The CBI-style wage subsidy scheme would see small businesses paying employees in full for the days they work; the government would pay one third of the wages for those days the employee is off work, the employer would pay one third, and the employee would take a one-third pay cut on the days they are off work. That way, all three share the pain.

The other attraction is that it would be a lot cheaper than the furlough scheme.

A CBI-style part-time work subsidy scheme would cost, according to the Financial Times, £500m a month if 3m people joined the scheme compared to the Coronavirus Jobs Retention Scheme, which cost £4bn in August.

The TUC scheme is similar but asks the government to dig into its pockets more, paying 80 per cent of the wages for those days workers are kept at home.

Announcing the latest government Covid restrictions, Prime Minister Boris Johnson told the House of Commons yesterday: “The prime minister told MPs on Tuesday: “We will continue to put our arms around the whole workforce of the UK and to protect jobs and livelihoods, but we also want to see those businesses continuing and jobs being created.”

Further reading

Rishi Sunak to extend government coronavirus business support



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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...