Sunak considers German-style wage support - reports

Chancellor Rishi Sunak is considering replacing his furlough programme with German-style wage subsidies as part of measures to help businesses through the resurgence of Covid-19, according to reports.

Sunak's job-support programme, which pays up to 80% of laid-off workers' wages, finishes at the end of October. Millions of people remain on furlough and economists have predicted a wave of job cuts when the scheme is withdrawn.

After Sunak held talks with businesses and unions he is considering paying the wages of workers for short-time working in a scheme similar to Germany's Kurzarbeit (“short work”) system, the Guardian and other media reported. Under proposals put forward by the TUC companies would pay employees for time at work with the Treasury covering time when they have no work.

An industry source told the Guardian the Treasury liked the idea and was considering requiring workers to undertake education or training while not at work in exchange for state support. Sunak is up against time to come up with new measures with businesses likely to start job cuts at the end of September to trigger a 30-day consultation period that would end with the furlough programme.

The Treasury delayed an announcement scheduled for Wednesday to extend state-backed loans for struggling companies after Prime Minister Boris Johnson announced new restrictions to stem the spread of Covid-19. Sunak now intends to announce the loan extension with a wider range of economic support that could include wage subsidies, the Guardian said.

The government has come under increasing pressure to extend or replace the furlough scheme, which helped prevent mass unemployment as the UK plunged into the deepest recession since before the second world war. The Confederation of British Industry backed Johnson's restrictions on Tuesday but said further support to save jobs was essential.

Johnson indicated that Sunak was working on new proposals to support jobs when he announced 10pm closing times for pubs and restaurants and called for employees to work from home if possible on Tuesday.

“I know that my right honourable friend the chancellor will be applying … his imagination and his creativity to helping those sectors in the months ahead,” Johnson said.