Job Support Scheme: how it works and what leaders and influencers think
Many wrongly understood the Job Support Scheme to mean that an employee working one third of their hours would be paid for those hours by their employer and that the government would top up that pay to two thirds of their usual income. What the announcement actually said was “the government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours”.
One third is paid for the work done. Of the remaining 66% of income that would have been lost for work not done, the government and the employer has to pay two thirds.
- 22% of full pay is paid by the government, 22% is paid by the employer, and the employee takes the hit on the other 23% (1% extra because of all the previous rounding down).
- The employer pays 55% of normal pay for 33% of the work.
- The government pays another 22%.
In this article various experts give their opinion on the scheme including
- Nigel Morris, tax director at MHA MacIntyre Hudson
- Carys Roberts, executive director of the Institute for Public Policy Research (IPPR)
- Peter Cheese, CEO of the CIPD
- Musab Hemsi, partner at HR and employment specialist LexLeyton
- Kirstie Donnelly, CEO of City & Guilds Group
The winners and losers from the Job Support Scheme
The scheme offers a lifeline to SME companies, but questions remain for larger firms. Big businesses can only access the Jobs Support Scheme if they have taken a big hit from the economic effects of COVID-19. The scheme is also little help to companies already struggling and laying off staff.
The chancellor’s new plans are also less generous than the current furlough scheme, and further redundancies are inevitable. If the COVID-19 economic hit continues into 2021 there is also the risk of a ‘cliff edge’ problem if the scheme runs out after six months and is not extended.
Some economists believe the Chancellor’s Winter Plan for the economy hasn't done enough to prevent a wave of Job losses over the coming months.
The scheme is partly based on Germany's long-established Kurzarbeit, which economists have described as being effective, but the key difference between Kurzarbeit and the UK initiative is the German scheme doesn't require employers to contribute.
"The scheme effectively is a tax on employers seeking to reduce workers' hours. It will help to concentrate employment, not maintain aggregate headcounts," says Samuel Tombs, Senior UK Economist at Pantheon Macroeconomics.