While ECA supports the principle and objectives of the scheme, there is concern over the detail. Notably, ECA believes that the divide created between workers kept on, and those being ‘furloughed’, could lead to ill-feeling and resentment in the workplace.
Chancellor Rishi Sunak announced that ‘furloughed’ workers would be effectively paid 80 per cent of their wages by the state to be kept on the payroll, but not undertake any work.
ECA’s director of employment and skills, Andrew Eldred, commented: “The Coronavirus Job Retention Scheme surely represents one of the most extraordinary products of these times. An effective 80 per cent state subsidy for wages in the private sector, in a previously liberal free-market economy.
“While ECA supports the principle and intentions of this scheme, there are many questions which remain unanswered. For instance, the need to potentially divide the workforce into two groups – those who continue to work, and those who are paid 80 per cent of their wages by the state not to work – could cause ill-feeling and resentment.
“Instead, ECA believes that a more flexible approach needs to be designed into the scheme from the start. First, employers should be given the option to share work more equitably between their employees. In addition, employers and their employees should be free to agree other reduced hours working arrangements, whilst still enjoying the security offered by the Government’s 80 per cent pay guarantee.”
ECA believes that sharing work more equitably between employees could be achieved by them moving between working and ‘furloughed’ status according to a structured pattern – for example, one week ‘on’, followed by one week ‘off’. Arrangements of this sort are quite common for ‘furloughs’ in the USA, and there are similar arrangements for short-time working arrangements in the UK.
Secondly, ECA believes employers and their employees should be free to agree other reduced hours working arrangements, whilst still enjoying the security offered by the Government’s 80 per cent pay guarantee. This extra flexibility should help encourage businesses to continue servicing customers – for example by carrying urgent or safety-critical work – without putting their own survival and the economic security of their employees at risk.
The Government’s coronavirus job retention scheme is open to all companies regardless of size. They can apply to HMRC for a maximum of £2,500 per ‘furloughed’ worker per month, worth 80 per cent of their wages, with a grant paid direct to the business.
Other measures announced on Friday to support businesses included an extension of the business interruption loan scheme to 12 months, and the ability to defer VAT bills until the end of the year.