CIPD calls for government wage subsidies to minimise redundancies and support income for those facing reduced hours
Government and employers need to work together to provide leadership, support business resilience and protect peoples’ incomes and jobs
The CIPD has written to the UK Treasury calling for more action to protect jobs and help ensure that working people – including the self-employed and contract workers – earn enough to cover their basic living costs for the duration of the COVID-19 crisis.
In a letter to the Chancellor, the professional body sent detailed proposals for a wage and training subsidy that would help minimise redundancies and ensure a sustained income for those facing significantly reduced hours. It also reiterated the need to increase Statutory Sick Pay and enable more people to benefit from it by removing the income threshold and making the self-employed eligible to claim.
The CIPD’s proposed wage subsidy, based on similar successful schemes that operated in other countries following the 2008-9 financial crisis, would benefit up to 300,000 workers at a cost of approximately £1.7billion, providing employers support for an initial three-month period, which could be extended if required. Under the scheme, private sector employers would apply to the Department for Business, Energy and Industrial Strategy (BEIS) for funds that would enable them to continue paying workers that would otherwise face redundancy or significantly reduced hours. The CIPD has recommended a basic rate of 60 per cent of gross pay, increasing to 100 per cent for the worst hit sectors such as transport, hospitality and leisure. For those not eligible for the fund, the CIPD has recommended an increase in 'guarantee pay’, which workers placed on short-time working are already entitled to.
The OECD evaluated 24 similar schemes introduced in 2008-09 and concluded that they ‘significantly reduced job losses during the downturn while providing income support to workers on reduced working hours.'
In addition to the wage subsidy, the CIPD has called for training grants worth up to £3,000 per employee. These would enable those on reduced hours to take advantage of a period when time spent on learning and development will not be crowded out by regular job demands.
Peter Cheese, CIPD chief executive, comments:
‘This is a crisis unlike anything we have faced before. Government and employers need to work together to provide leadership, support business resilience and protect incomes and jobs. The £350 billion support package announced this week will make a massive difference to hard pressed employers and individuals concerned about their and their loved ones’ health and financial security.’
'But it now seems clear that the economic impact of the coronavirus is likely to be considerable and more action is needed to protect jobs and financial security. Wage subsidies have been effectively introduced in other developed economies and we think this is something the Government should now seriously consider for the UK. We look forward to working with the Government to do “whatever it takes” to help protect working people, increase workplace resilience, and make a rapid recovery more likely.’
The CIPD is also urging employers to be as flexible and understanding as possible when it comes to the impact of school closures on working parents. Peter Cheese comments:
‘Employers must accept that there will be disruption and that working parents will struggle to be as productive as normal. Employees should speak to their line managers and HR teams to understand how they can best balance family and work commitments.’
The rapidly changing context employers find themselves in at this difficult time is putting immense pressure on the people profession to do the right thing for their people and their organisations. In response, the CIPD’s employment experts are updating the Coronavirus Hub, available to both members and non-members alike, with new advice and guidance every day. Members are also supporting each other through the CIPD’s online community and have access to a free employment law helpline, available 24/7.
The CIPD is continuing to gather insights about the challenges employers are facing – through regular surveys, feedback from member helplines and community discussions, and ongoing engagement with senior members. Its policy team is liaising with relevant government departments to share these insights and help ensure policy decisions are targeted in the right direction.
As measures to stem the spread of COVID-19 take on increasing priority, the CIPD will collate and publish updated resources to support your response