Why we need a short-time working subsidy
UK unemployment continues to rise steeply. Today, with the Federation of Small Businesses, we have published our proposals for a short-time working subsidy – which we believe could provide a quick and effective way to cut costs for struggling businesses and provide vital financial help for hard-pressed employees.
While we welcome recently announced measures to support those facing unemployment of over six months we believe that further action is necessary to prevent jobs from being unnecessarily lost in the first place. For a cost of around £1.2 billion annually (excluding training costs) up to 600,000 workers each year could receive support.
Across Europe, Governments have made subsidy packages available to employers moving workers to short-time hours or making temporary lay-offs. For example, schemes are in operation in Germany, France, Spain, the Netherlands and Italy. Wales has also recently launched an innovative subsidy scheme (ProAct) which has already received praise from the Prime Minister.
We are aware that effective targeting is key to the success of such schemes. The TUC and FSB therefore believe that any support package should be based on the following principles:
- subsidies should be time limited;
- the total subsidy per worker plus their Job Seekers Allowance (JSA) entitlement should amount to 60 per cent of their previous wages;
- employers should meet workers’ National Insurance contributions during the lay-off or the reduction in hours;
- where employers are able to make additional contributions to workers’ pay, the Government subsidy should not be reduced;
- access to the scheme should be contingent upon long-term business viability and genuine need (as assessed and agreed by union, employer and Government representatives), and;
- workers facing reductions in their hours or a temporary lay-off should be given access to Government-funded training.
We are convinced that strong interventions now can save us from the costs of long-term unemployment in the future. We hope that Govenment will act.