LONDON (Reuters) – British finance minister Rishi Sunak will tell employers on Friday how much they must contribute to the government’s hugely expensive wage subsidy programme from August, a prospect that some firms say will lead to more job losses.
FILE PHOTO: Britain’s Chancellor of the Exchequer Rishi Sunak attends a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain, March 17, 2020. Matt Dunham/Pool via REUTERS/File Photo
Sunak will say companies must pay between 20% and 30% of the costs of the programme – the centrepiece of his attempts to protect the economy from the coronavirus shutdown – according to media reports.
He is also expected to say when workers on the scheme, which is due to run until the end of October, can return on a part-time basis, something many firms want as they build up operations gradually.
Around 8.4 million temporarily laid off workers, or about one in three private sector employees, are covered. The cost to the public finances so far is 15 billion pounds ($18.5 billion).
Unions and employers are united in support for the scheme. The Bank of England says it could limit a rise in the unemployment rate to about 9%, still double its most recent reading.
Under the plan, workers receive 80% of their wages up to 2,500 pounds a month until the end of October.
Some British employers are worried that they will not be able to contribute to the scheme with the economy expected to start recovering only gradually by August.
The Institute of Directors said this week that a quarter of its member firms using the scheme would struggle to pay a share of the costs, raising the risk of job losses.
Sunak has previously said the scheme is too expensive to continue indefinitely.
Britain’s borrowing in April alone of over 60 billion pounds was equivalent to almost all of the previous financial year.
About 2.3 million claims totalling 6.8 billion pounds have been made for a similar programme for self-employed people. That scheme is due to close this weekend.
Writing by William Schomberg; Editing by Hugh Lawson