Labour has called for stronger action to prevent a winter surge in unemployment after releasing figures showing the UK government is providing less generous wage support to employers than other major European countries.
The shadow chancellor, Anneliese Dodds, accused Rishi Sunak of adopting a “sink or swim” approach as Labour published a report unfavourably comparing the Treasury’s jobs support scheme with what is on offer in Germany, France and the Netherlands.
The opposition party said in three of the sectors most at risk of seeing significant job losses in the coming months – hospitality, manufacturing and arts, entertainment and recreation – employers in the UK had much less of an incentive to employ staff part-time.
It said employers who wanted to bring two staff back for half the working week instead of keeping one employee on full-time and making the other redundant faced much higher wage costs in the UK than they would in the three eurozone countries.
In his winter economic plan last month, the chancellor announced the replacement of the government’s furlough scheme with a jobs support scheme under which an employee working at least a third of normal hours has their pay topped up by the state and their employer.
Labour said that for someone working half time, the cost to employers across the three sectors was twice as large in the UK as in France and two-thirds higher than in the Netherlands. German employers pay no wage tops for those working part time.
Sunak has said his £1,000 job retention bonus (JRB) – payable for every worker brought back off furlough and kept on the payroll until next January – provides an added incentive for employers to retain staff.
However Labour said that even if the two UK workers qualified for the JRB on top of the job support scheme payment, wage costs remained significantly higher. In manufacturing, the difference in wage costs for a UK business employing two workers on median earnings half-time compared with one full-time was £197 per week, or £159 a week once the JRB was taken into account. That compared with £118 a week in the Netherlands, £83 a week in France and nothing in Germany.
Dodds said: “The chancellor should have introduced a job recovery scheme that incentivised employers to keep more staff on. Instead, his JSS makes it more expensive to bring staff back than many other international schemes.
“Viable businesses just need support to cope with the restrictions the government has imposed on them. They pinned their hopes on the chancellor to deliver, but he’s forcing them to flip a coin over who stays and who goes.
“This wasn’t by accident – it was by design. The chancellor’s sink or swim job support scheme is a throwback to the worst days of Thatcher, and just like in the 1980s people on the lowest incomes will pay the highest price.”
The Treasury said total UK support had been higher than France’s and around the same as Germany’s. A spokesperson said: “The JSS is targeted to provide what employers have told us they need – support to keep employees on even whilst they are experiencing lower demand, with greater flexibility.
“Our unprecedented and comprehensive package of support has helped millions of businesses and individuals across the UK get through the crisis, and the scheme is just one part of that.”