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U.K.’s Sharma Rejects Calls to Extend Virus Job Support Measures

U.K.’s Sharma Rejects Calls to Extend Virus Job Support Measures

Business Secretary Alok Sharma dismissed calls to extend the U.K.’s coronavirus support programs, saying the government is putting its focus on reopening the economy in a “cautious and phased manner.”

“We need to get businesses back up and running,” Sharma told BBC Radio 4 on Tuesday. He reiterated the government’s guidance that employees who can return to their workplaces should now do so.

Chancellor of the Exchequer Rishi Sunak has come under intense pressure to extend the government’s furlough program, which is helping to pay the wages of almost 10 million U.K. jobs. Sunak has described that support as “not sustainable” -- even as economists have warned that removing it early could trigger a wave of mass unemployment.

“The package of support that the U.K. government has provided is one of the most generous and comprehensive in the world,” Sharma said.

Winding Up

The furlough program will start to be scaled back next week, with companies being asked to contribute a greater share of employees’ wages, before it ends completely at the end of October.

By withdrawing that support too soon, the government is putting two million viable jobs in peril, according to The Institute for Public Policy Research, which estimates that three million workers will still be relying on the plan when it finally finishes. Two-thirds of those people could be kept in employment if the government’s financial support was extended into next year, the think tank estimated.

What Bloomberg’s Economists Say...

“As things stand, there are still a significant number of people on furlough whose fate has yet to be decided. Of course, it’s possible that as demand recovers these workers are brought back by their respective employers. But it also raises the specter of the U.K. facing a sharp rise in unemployment this fall as the government continues to wind down the scheme, ending it in October.”

--Dan Hanson, senior U.K. economist. For full INSIGHT, click here

U.K.’s Sharma Rejects Calls to Extend Virus Job Support Measures

The threat of a resurgence in the pandemic also hangs over the government’s plans, in particular if a surge in infections forces significant numbers of workers to self-isolate. Without financial support, there is a risk that staff will continue to work, potentially contributing to a new spike in the virus that could again cause parts of the economy to shut down.

‘Loss of Income’

A group of leading trade unions and senior members of the opposition Labour Party is backing a “Time Out to Help Out” campaign, calling on the government to pay the wages of employees who need to go into self-isolation.

Labour Mayor of Manchester Andy Burnham said workers shouldn’t have to “make a choice between self-isolating or face a drastic loss of income.”

But Sharma indicated the government has no plans to intervene, calling it an issue for companies and their staff.

“There is a discussion that needs to take place between employers and employees, and I think it’s important that employers do the right thing by their staff,” he said.

©2020 Bloomberg L.P.