Chancellor of the Treasury Rishi Sunak announced a package of £ 30 billion in financial aid this week to support the economy and save jobs.
Tax incentives and financial rewards have been announced with the aim of protecting jobs and preventing a massive wave of unemployment hitting the UK once the leave scheme is introduced in October.
They were accompanied by consumer discounts designed to boost the hospitality industry and a new intern scheme designed to give 16- to 24-year-olds universal credit for a six-month internship.
One of the main components of the government’s mini budget is the £ 1,000 corporate bonus for every redundant employee who returns to work after government support has ended, which can cost up to £ 9 billion depending on the number of employees employed. brought back to work.
There are currently more than nine million British on leaveand many of them have been warned that they may no longer have a job to return to once government support has ended. This scheme can save jobs that would otherwise be lost.
Will the government’s mini-budget save the UK from a wave of massive unemployment, or is Sunak’s policy not as useful as it seems?
The Chancellor hopes that his £ 1,000 bonus per employee will incentivize companies to retain personneleven if only for a handful of months, to prevent huge amounts of jobs from being lost if leave is lost.
Sunak said he wanted his message to companies to be clear: “If you are behind your employees, we are behind you.”
Employers will only receive the money if the people they detain after the leave are still employed at the end of January 2021 and during that time earn on average more than £ 520 per month. They would then receive the money from February 2021.
If companies want to get their hands on £ 1,000 per employee bonus, they must ensure that each employee is still employed until November, December and January.
It can help companies who are unsure if they can afford to keep staff, even for just a handful of months, meaning people who would otherwise have lost their jobs could continue to work and pay longer can stay.
Avoiding a huge wave of job losses once the leave scheme has disappeared can help boost demand for companies and put them in a state where they can afford to keep staff on the job for long periods.
The Chancellor’s Job Retention Scheme will reward employers for hiring their staff after the leave scheme has disappeared, even though it may not save every job, it should keep some people working. That must be a good thing.
But while employers pay a £ 1,000 bonus for every employee they keep on leave, it sounds like a good idea that it might not do as much good.
The Chancellor has been criticized for launching a policy that will pay money to companies that could already afford to fire their staff while not paying enough to those who currently think they cannot afford to keep all their workers.
According to the National Institute of Economic and Social Research, a £ 1,000 bonus is “too small to be effective” to convince bosses to apprehend staff they would otherwise fire after the leave arrangement was over.
The job retention scheme requires companies to spend at least £ 1,560 per employee on wages so that they can qualify for a bonus of £ 1,000. Even if they bring in workers to do the bare minimum to qualify for the bonus, they will still lose money, in which case it is hard to imagine someone feeling comfortable at £ 520 a month.
The Chancellor has also been warned that offering the hiring bonus for just £ 520 per month could result in employers reducing full-time staff on a part-time basis, which could lead to a large amount of unemployment.
It also seems that nothing prevents employers from holding their staff until the end of January to collect a bonus before being fired in February. It can simply postpone unemployment and spread a little instead of saving jobs.
Jim Harra, the highest official at HM Revenue and Customs, refused to sign the contract as he was unsure if it would provide value for money.
He has asked the chancellor to issue specific instructions to continue, stating that Sunak should take responsibility for a policy that the government has advised against.
Harra said there was a “healthy policy reasoning” behind encouraging companies to retain personnel and prevent unemployment, but he feared that the government could in no way judge how effective the policy would be.
Sunak has admitted that some of the money the government spends on saving jobs will be “dead weight” toward people who don’t need it, because the government doesn’t have enough information to target the policy alone those companies that will struggle to afford to bring their staff back from leave.
The government doesn’t know how much of the £ 9 billion that will actually be put aside will actually be spent, how many jobs will be saved by offering the bonus, or how much of the money will go to companies that could already afford their employees back to get .
Handing out £ 1,000 in bonuses for every job that survives the end of leave may sound great, but there is serious concern that much of the money will go where it isn’t needed, while it won’t be enough to save jobs that be in danger .
There are approximately 9.4 million Britons on leave who have received 80 per cent of their wages up to a maximum of £ 2500 paid by the government.
From 1 August, the money provided by the leave scheme will be reduced. In August, employers will have to pay employers National Insurance Contributions (ER NICS) and pension contributions for the hours their staff work.
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In September the leave scheme will be reduced to 70 percent of wages to a maximum of £ 2,187.50 for the time employees are on leave. Employers will have to increase their employees’ wages so that they receive 80% of their wages if they are made redundant.
October will be the last month of the leave scheme and the government contribution will drop to 60 percent of wages to a maximum of £ 1,875, with employers rising to 80 percent for staff being fired.
The arrangement will expire on October 31, with Sunak making it clear that there will be no renewals.