Sunak Urged to Cut Employment Costs for Crisis-Hit U.K. Firms
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak is facing pressure to cut the cost of employment to encourage firms not to axe jobs over the next few months.
Reducing social security contributions by 500 pounds ($637) per employee could “protect businesses and preserve jobs,” the British Chambers of Commerce said in a report published Wednesday. The business lobby issued its plea alongside the findings of its latest survey of over 750 firms. They showed:
- On average, businesses are operating at half of their pre-Covid 19 capacity
- A third plan to shed workers in the next three months as government wage subsidies are phased out
- Over half have staff furloughed full time, despite now being allowed to bring them back part time
- Rent and salaries were among the “major obstacles” to maintaining day-to-day operations
- The Coronavirus Business Impact Tracker was carried out July 6 to July 10, in partnership with job site Indeed
“The time has come for the government to take radical steps to slash the tax burden around employment to help companies pay valued staff,” said Adam Marshall, BCC director general.
Prime Minister Boris Johnson announced on Friday a further lifting of lockdown restrictions, with the reopening of more leisure and sporting sectors. But many consumers are reacting cautiously to the gradual return to normality, preferring to save and pursue online activities instead.
The crunch comes in October, when government programs supporting over 12 million workers come to an end. Economists say this could trigger a wave of job cuts unless Sunak announces further assistance soon.
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