Furlough extension: Could furlough extensions happen based on industries hardest hit?
Furlough has been a safe haven for more than nine million workers since March 20. But now the scheme is nearing its end as the Government begins to kickstart sectors of the British economy and urge workers to return to COVID-19 secure workplaces. Several industries which have been hardest hit by the coronavirus pandemic are urging the Government to consider industry-specific extensions, but might the Government consider this option?
How does the furlough scheme work?
The Government’s Coronavirus Job Retention Scheme colloquially known as the furlough scheme has allowed employers forced to close or scale back their business operations to retain their workers without losing out.
Employers have been able to claim a grant worth up to 80 percent of each worker’s normal wage up to £2,500 a month.
The scheme was first introduced on March 20 and could be backdated to March 1 and has helped more than 9.3m people in total.
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How will the furlough scheme change from July to October?
The Government announced the furlough scheme would undergo changes each month from July until it ends in October.
From July 1, employers are permitted to invite furloughed workers back to work for any amount of time or for any shift pattern.
The employers are still entitled to claim payments for the time these workers do not work but are expected to pay for the time employees undertake work.
From August, employers are expected to contribute to wages by paying for the National Insurance and pension contributions for furloughed staff members.
From September, the Government will contribute up to 70 percent of an employee’s wage up to £2,187.50.
The employer will be expected to contribute 10 percent of a worker’s salary up to £312.50 and will have to continue covering the national insurance and pension contributions.
October is the last month of furlough and from then the Government will pay up to 60 percent of a worker’s salary up to £1,875.
The employer will continue paying employer national insurance and pension contributions and will have to pay up to 20 percent of a worker’s salary up to £625.
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Could the furlough scheme be extended for certain industries?
Business groups and trade unions have started lobbying for a third postponement to the cut-off date for the furlough scheme.
The call for an extension came as more than 12,000 jobs were lost in just two days.
Over the past two days retailers and aviation companies including John Lewis and Airbus have announced plans to restructure and let go of thousands of staff members amid the crisis.
The airline industry has also struggled, with Airbus announcing 1,700 UK job cuts on Wednesday and easyJet announcing plans to cut 727 pilot and 1,200 cabin crew jobs.
On Wednesday during Prime MInister’s Questions (PMQs), Labour leader Sir Keir Starmer called for an extension to the furlough scheme amid the rising job losses during the coronavirus pandemic.
Speaking in the House of Commons Sir Keir said: “Will the Prime Minister start now by extending the furlough scheme for those parts of the economy still most at risk?”
Prime Minister Boris Johnson has crushed their hopes by stating categorically no extension will be granted for the third time.
He told the Evening Standard: “I’ve got to be very, very blunt with you. We’ve spent £120 billion supporting people, it’s a huge commitment and we have put our arms around people…But I think people need to recognise that the particular restrictions that furlough places on you are not, in the long-term, healthy either for the economy or for you as an employee.”
Mr Johnson added stopping people from working was preventing the economy from getting moving.
He told the Evening Standard: “But I think people need to recognise that the particular restrictions that furlough places on you are not, in the long term, healthy either for the economy or for you as an employee.
“You are keeping people in suspended animation. You are stopping them from actually working.
“I am being absolutely frank with you, we are pushing it out until October but in the end you have got to get the economy moving.”
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