In this week’s mini-Budget, Chancellor Rishi Sunak announced the government’s plans to introduce a job retention bonus to support employers with returning staff to work following furlough. Under the terms of the scheme, for every employee that returns to work and is paid above the lower earnings limit of £520 a month between the end of October 2020 and the end of January 2021, an employer will receive a £1,000 bonus.
The scheme has been designed to support employers through the transition period, but some in the industry have already questioned whether it goes far enough.
When delivering his mini-Budget, Sunak explained that the government’s Coronavirus Job Retention Scheme would continue to be wound up as planned by the end of October in order to avoid giving individuals false hope that they will be able to return to work at a future date when, in reality, their role is unsustainable in the long term. Having a definite end to the scheme means employers will now have to make some difficult decisions over the future of their business and which roles are, ultimately, likely to prove sustainable and business critical going forward.
While the new job retention bonus will undoubtedly help some organisations fund the return of some employees from furlough, questions have been raised over whether this amount will be enough of an incentive to outweigh the cost savings associated with losing a staff member all together? Is the bonus set at a level that will encourage employers to bring staff back from furlough that they would not otherwise have done?
And will the government’s kickstart scheme encourage organisations to employ younger staff on short-term placements instead of carrying the cost of older, more experienced staff?
With the International Monetary Fund (IMF) having described the global economic decline resulting from the Covid-19 pandemic as the worst since the great Depression of the 1930s, numerous organisations are now battling to survive, with many having already made difficult decisions to reduce their workforces, and many more seeking ways to avoid doing so. In the last few days alone, organisations including retailers John Lewis and Boots have announced plans to lose thousands of jobs, while airline Ryanair has negotiated a four-year pay cut with its cabin crew in an attempt to avoid job losses.
Ultimately, the reach of the pandemic’s impact is such that business collapse and widespread job losses are inevitable. As we move through such turbulent times, it will become clear whether further support is needed to aid economic recovery and support long-term business sustainability.