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Tue, 29 September 2020

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Labour demands German-style scheme to stave off redundancies by letting firms cut workers’ hours instead

Labour demands German-style scheme to stave off redundancies by letting firms cut workers’ hours instead

Chancellor Rishi Sunak is being urged to step up the UK’s wage subsidy programme. (PA)

3 min read

Britain should consider adopting a German-style social insurance programme to stop companies laying off staff by allowing them to cut workers’ hours instead, Labour have said.

Shadow Chancellor Anneliese Dodds urged the Government to consider copying the European nation’s long-running ‘Kurzarbeit’ scheme, as she warned the “one-size-fits-all withdrawal of wage support” looming in October will see job losses soar.

And the opposition frontbencher said that while the Government’s furlough scheme could not go on “indefinitely”, a raft of grim economic data should prompt ministers to switch to more “targeted” support.

The intervention comes after the latest GDP figures laid bare the scale of the UK's economic slump amid the coronavirus pandemic.

The UK is now in a record recession after the economy shrank by an unprecedented 20.4% between April and June this year, the second quarterly decline after a 2.2% hit between January and March.

Writing in The Telegraph, Ms Dodds said: “Every country in the world has been hit by coronavirus and had to cope with the health and economic implications of the pandemic. 

“Labour has acknowledged this and acted as a constructive opposition – but it is clear that our Government's handling of this crisis compares dismally to its international counterparts.”

Pointing out that the French economy shrank by 13.8% over the same period, while Italy’s tumbled by 12.4%, and Germany suffered a 10.1% contraction, Ms Dodds (pictured below) said Britain was now facing a “double tragedy” of mounting Covid-19 deaths and a struggling economy.

Chancellor Rishi Sunak’s multi-billion pound Coronavirus Job Retention Scheme, which has seen the state step in to pay the wages of millions of employees, is gradually being pared back ahead of its end in October.

But Ms Dodds said Britain should look to Germany’s ‘Kurzarbeit’ programme, which was launched in the wake of the 2008 financial crisis and is designed to allow firms to reduce hours for their staff rather than making them redundant.

It sees sees the government there provide workers with an income “replacement rate” of around 60% for hours not worked, while getting full pay from their employer for the ones they do.

Ms Dodds said the Chancellor’s Summer Economic Statement had presented “the perfect opportunity to present creative solutions to protect jobs through the next stage of this crisis”.

“That does not mean extending the Job Retention Scheme indefinitely – Labour has never called for that – but instead reforming it so that wage support is targeted to the worst-hit sectors of the economy,” she said.

And the Shadow Chancellor added: “I urge Mr Sunak to look to the examples of countries like Germany, where a permanent short-term work programme known as Kurzarbeit has been in place ever since the global financial crisis. 

“German employers can reduce workers' hours when times are tough instead of making them redundant – exactly the sort of innovative solution that could save many jobs here in the UK.”

'NOT TOO LATE'

Mr Sunak last month unveiled a £1,000 bonus for s firms who retain a furloughed employee when the Coronavirus Job Retention Scheme comes to an end in October.

But Ms Dodds branded that a “gimmicky” response “that risks handing over too much public money to businesses that were planning to bring people back to work anyway”.

And she warned: “The decisions his Government takes right now will determine how, and at what pace, we emerge from a recession that is already deeper than it needed to be, and with what cost to lives and livelihoods. 

“The lights on the dashboard are flashing red – but it is not too late for the Government to change course.”

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