Rishi Sunak’s Furlough Replacement ‘Will Lead To Job Losses’, Experts Warn

Rishi Sunak has been warned that his decision to replace furlough with less generous wage subsidies will lead to widespread job losses.

The chancellor announced plans to allow workers to have some of their lost wages covered by the government for six months if their hours are reduced, following the imposition of fresh coronavirus restrictions.

Sunak insisted the jobs support scheme was focused on saving jobs that would have been “viable” if businesses were not hamstrung by the imposition of Covid-19 restrictions, by encouraging firms to keep people on part-time.

The moves were welcomed by the CBI industry lobby, who proposed a very similar plan, as well as the Trades Union Congress (TUC).

But Paul Johnson, director of the independent Institute for Fiscal Studies (IFS) said that while the changes were “understandable”, many furloughed workers were “now likely to lose their job”.

Torsten Bell, chief executive of the Resolution Foundation, said the move would temporarily stem job losses but not stop them.

He said the scheme will not, on its own, encourage firms to keep workers on part-time rather than fire them because it will still be cheaper to employ one full-time worker than two on reduced hours.

But Sunak’s job retention bonus - paying companies £1,000 to rehire previously furloughed staff - will at least give companies the incentive to retain workers part time until firms are eligible for the bonus at the end of January, which he described as “a new cliff edge”.

“After January this scheme will not be effective at encouraging firms to hold onto workers in the sectors that are hardest hit (ie hospitality/leisure) - the employer...

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