How the U.K. Is Joining Nations Fighting to Save Jobs

Governments facing a choice between supporting jobs or letting the economy take its course in the pandemic are frequently opting to back their workers, even if measures may only offer temporary relief. U.K. Chancellor of the Exchequer Rishi Sunak’s introduction of a new six-month scheme to subsidize wages of people in part-time work, even as an earlier program was being phased out, is just one example of a global phenomenon.

Sunak has announced a new jobs support program to succeed the furlough policy, which was due to end on Oct. 31 and has supported more than 9 million jobs at a cost of 39 billion pounds ($50 billion). Under the furlough program, the government paid people who were unable to return to their workplaces because of Covid restrictions as much as 80% of their wages. The replacement policy will provide subsidies to workers who can return to their jobs for at least a third of their normal hours. Their employer will pay the hours they work, and the government and employer will each pay a share of wages for the hours they don’t work. It means that people on the new program will be guaranteed at least 77% of their normal wages. But it also leaves employers potentially on the hook for 55% of wages for an employee working just a third of their normal hours. Bloomberg economists Dan Hanson and Jamie Rush said a spike in unemployment appeared inevitable, with the risk of employers shunning the scheme rather than paying for employees on reduced hours.