As the new rules around the UK come into force to try to curb the spread of COVID-19, pressure has built on the Chancellor to extend the furlough scheme to prevent a much-predicted mass unemployment event as the support scheme draws to a close at the end of October.
I would imagine that the Government was hoping a second wave of the virus would have come later into Autumn. As it is, its here now and we’re all being asked in various capacities to once again make changes and sacrifices. But if the Government is going to ask us to do so, and with more measures likely if these new ones fail to make a significant dent in the spread, then more support is going to be needed.
Right now we’re in phase 2 of the winding down of furlough, where companies have to make a 10% contribution towards the wages of furloughed staff, with the Government making up the other 70%. In October that business contribution rises to 20% and the Government contribution drops to 60%. On Halloween it stops altogether.
On Wednesday the Chancellor Rishi Sunak tweeted:
As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter. pic.twitter.com/eP6aqcocxd— Rishi Sunak (@RishiSunak) September 23, 2020
According to reports, the Chancellor is considering a salary top-up scheme which is being operated in Germany. For those who are not sure what the German scheme is, here’s an explanation according to Employee Benefits:
As part of the short-term work scheme, employees are able to work shorter periods of time, with the government topping up their wages, meaning that more staff can stay employed on the payroll, working for fewer hours. Under the scheme, these employees will receive 60% of their net wages from the government during the first three months, 70% in their fourth month and 80% in their seventh month. Furthermore, employees with at least one child receive an additional 7% per month.
If a scheme like this is brought into place, furlough would end on October 31st and this would replace it. It would still come at a large cost, but with the Government now implementing stricter measures, with more likely in the coming weeks and months, there is immense pressure now on the Government to support those hit by the measures.
For fenestration, this matters. There is still a proportion of workers in this sector still on furlough and both businesses and people in this industry may feel relief after the statement tomorrow. With Boris Johnson warning that the latest measures could last at least 6 months, any new support scheme will likely last at least as long, if not longer.
According to the BBC, there are a number of other options on the table for the Government:
- Germany’s Kurzarbeit: The employer cuts workers’ hours and the government pays them a percentage of the money they would have lost as a result. It is a long-established scheme, but it has been revised during the pandemic. It can now run for up to 21 months and the percentage of lost wages paid by the government can now be as high as 80%.
- France’s “chômage partiel”: The French scheme, known as “partial unemployment” or “partial activity”, also pre-dates the coronavirus pandemic. Firms are allowed to cut employees’ hours by up to 40% for up to three years. Employees still receive nearly all their normal salary, with the government paying a percentage of the cost.
- The CBI’s suggestion: A wages top-up from the government should be available provided that employees can work at least 50% of their normal hours. The firm would pay the actual hours worked in full, but the employee would get paid for two-thirds of the lost hours, with the cost shared between the company and the Treasury. The subsidy would last up to a year.
- The TUC’s suggestion: A more generous version of the above. Employees could work a smaller proportion of their normal hours and still be eligible, while they would be guaranteed 80% pay for the hours lost, or 100% if they are on minimum wage.
We will have to wait and see what the official new support scheme looks like, but whatever is announced, fenestration will be a part of it. As we head into the winter it may be a scheme that needs to be used more as demand over the winter may drop.
Support for sectors?
If the Chancellor is thinking about introducing any of the above, the question then is if other more specific sectors will get targetted help. The fenestration sector isn’t calling for one naturally, as we’re way busier than expected. But other sectors are struggling.
Hospitality is the most obvious sector. The Eat Out to Help Out scheme was popular, but temporary, and reduced operating hours is going to limit the amount of revenue establishments can make. Airlines and travel, with demand not even close to anything like pre-COVD levels are also calling for more support. The pilot scheme to allow fans back into stadiums and for conference centres to reopen has been paused, likely for as long as the measures are in place for which could be 6 months. Both areas of the economy are also asking for help if they cannot allow people back through their doors for another half year.
There will be a line at the Chancellor’s door for more help. If there is to be targetted help, it may go to airlines, travel and hospitality first. These are both very large areas of the economy, both bring in masses of tax revenues for the Treasury. The Government may give them more help tomorrow, but I can’t see them being able to give bailouts and more specific schemes to each and every sector that is asking for it. I suspect that the new JRS 2.0 might be the main and single pillar of the support being announced tomorrow.
Its also been confirmed that there will be no Budget in November. Again a sign that the pandemic has progressed sooner than expected. That would have been a more natural time to announce more support schemes if required. As it is, its needed now. Tomorrow might well feel like a mini-budget in itself.
My only other thought I would add is this; when the fenestration sector is doing so well, and creaking under the weight of high demand, we sit in a privileged position to be able to embark on a hiring path. With people unable to spend their money on many other things right now, there’s a good chance demand for our products is going to be high, even as we head through winter and into 2021. I’d like to see our industry reach out to other sectors that are struggling and say to those losing their jobs that good careers and good money can be found here. For too long we have talked about the need for more young people in this industry. Well now is a chance to not only correct course on that, but to also provide new, vital opportunities to those seeking employment during this crisis. We have a chance to do a really good thing for others.
Analysis of the Chancellor’s new measures will follow tomorrow.
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