TUC warns UK government against abrupt end to furlough

The UK’s trade body has warned against an abrupt end to furlough schemes, and is calling on the government to establish a permanent short-time working scheme; as “a post pandemic legacy” to help protect working people through periods of future economic change. 

The call for a permanent short-time working scheme comes exactly six weeks before the furlough scheme is set to end (on 30 September 2021); the date at which employers are legally obliged to start consulting on planned redundancies with their staff. The TUC is warning that an abrupt end to the furlough scheme will cause unnecessary job losses; and may harm the country’s economic recovery. 

The jobs market is still fragile, with more than a million people still on furlough. “An abrupt and premature end to the furlough scheme will needlessly cost jobs; and harm our economic recovery,” stated TUC General Secretary Frances O’Grady. “Instead of pulling the rug out from under the feet of businesses and workers, the chancellor must extend the furlough scheme for as long as is needed to protect jobs and livelihoods.” 

FRAGILE JOB MARKET

Everyone deserves “dignity and security at work”, added  O’Grady. “The pandemic shows how an unexpected economic shock can wreak havoc on jobs and livelihoods with little warning. In a changing and unpredictable world – as we battle climate change and new technologies emerge – a permanent short-time working scheme would help make our labour market more resilient; and protect jobs and livelihoods.”

Too often in the past, “periods of economic and industrial change have been badly mismanaged; increasing inequalities and leaving working people and whole communities abandoned,” she explained.  

AVIATION INDUSTRY CONCERNS

The aviation unions have also been raising concerns about the sudden end to the furlough scheme; and the loss of jobs in the sector. “The UK aviation sector is the only industry to remain effectively in a lockdown. It employs about one million workers directly; and ONS statistics show that 57% of remaining employees in air transport companies remain on furlough,” pointed out Captain Martin Chalk, Acting General Secretary of BALPA.

“The scale of jobs at risk of redundancy when the furlough scheme ends is self-evident, yet the footprint of aviation must not be missed; one in four constituencies has over 1,000 people employed directly by aviation companies,” he pointed out. “If the Chancellor chooses not to extend furlough, the effects will be felt by workers, communities and businesses right across the country.” 

Diana Holland, Assistant General Secretary of Unite, agrees: “Aviation is crucial to the UK’s economic recovery. It needs furlough support to continue while Covid restrictions apply. Airports and aviation support thousands of jobs. Without support all are at high risk.” 

DAUGHTER OF FURLOUGH

While far from perfect, the TUC believes that the furlough scheme is one of the major successes of government policy during the pandemic, protecting millions of jobs and livelihoods. On the back of the success of the furlough scheme, the union body is urging government to build on furlough; with a permanent short-time working scheme to make the labour market more resilient in times of change and crisis.  

“Setting up a ‘daughter of furlough’ to provide certainty to workers and firms through future industrial change would be a fitting pandemic legacy,” explained O’Grady. “Furlough has been a lifeline for millions of working people during the pandemic. Now is the time for the government to build on the success of furlough with a short-time working scheme; not throw away its good work.” 

PREPARING FOR TURBULENT TIMES AHEAD

The TUC predicts that the UK economy is likely to face significant risks in the future; be it from climate change and the transition to net zero, new technologies such as AI, new variants or another pandemic. All could cause unpredictable and widespread disruption in the labour market; causing big spikes in unemployment and business failure.  

The TUC cites failed attempts to manage industrial change in the past; which “left communities abandoned” and played a major role in the widespread regional inequality we see today. The union body said that if the government is serious about levelling up, it will put in place a permanent short-time working scheme to prevent inequalities spiralling. It believes that a short-time working scheme could play a vital role in achieving a ‘just transition’ to net zero. 

CASE FOR SHORT-TIME WORKING SCHEME

 In its new report, Beyond furlough: why the UK needs a permanent short-time work scheme, the TUC says the case for a short-time working scheme is clear, citing significant benefits for workers, firms and government. For workers, a short-time working scheme would: 

• Reduce the risk of workers losing their jobs in times of crisis.  
• Protect workers’ incomes; particularly as short-time working schemes are usually more generous than unemployment benefits.  
• Prevent widening inequalities; protecting women, disabled workers and BME workers who tend to lose their jobs first in a recession due to structural discrimination.   

Additionally the government would benefit by:

• Protecting against long-term unemployment; and the subsequent devastating impact on communities. 
• Helping to stabilise the economy; and encourage a faster economic recovery as workers continue to spend their wages. 
• Save money, as the cost of furlough schemes is often below the cost of unemployment benefits; particularly where costs are shared with employers. 

For employers, such a scheme would produce significant savings on redundancy, training and hiring costs, as they enable firms to keep skilled workers on their books. The union body points out that the UK is an anomaly among developed nations in having no permanent short-time working scheme to deal with periods of industrial disruption and weak demand. In the OECD, 23 countries had short-time working schemes in place before the coronavirus pandemic; including in Germany, Japan and many US states. 

SUGGESTED CRITERIA & GUIDELINES

The TUC said the scheme should be governed by a tripartite panel bringing together unions, business and government; which should be tasked with designing the criteria for the new scheme. In designing the scheme, the panel should take into account best practice from existing global schemes.

The union body has set out conditions, which must be in place for accessing a short-time working scheme. They include: 

• Workers should continue to receive at least 80% of their wages for any time on the scheme; with a guarantee that no-one will fall below the minimum wage for their normal working hours. 
• Any worker working less than 90% of their normal working hours must be offered funded training. 
• Firms must set out a plan for fair pay and decent jobs. 
• Companies should put in place an agreement with their workers, either through a recognised union or through consultation mechanisms. 
• Firms must demonstrate a reduction in demand, which can include restructuring.     
• Organisations should commit to paying their corporation tax in the UK; and not pay out dividends while using the scheme. 
• The scheme should ensure full flexibility in working hours. 
• There should be time limits on the use of the scheme, with extension possible in limited circumstances. 

Click here to download a copy of the report.

Another TUC survey, revealed that around 63% of working mums with primary school age children do not have sufficient childcare for the six-week school summer holidays, as reported.