Sunak considers German 'Kurzarbeit' system to replace furlough scheme

RISHI SUNAK is considering more "targeted measures" to help save jobs once its furlough scheme stops at the end of October, reports said, amid speculation that he could introduce German-style wage subsidies.

Opposition and business leaders have been urging the chancellor to extend the job retention scheme in some form to avoid a "cliff-edge effect" they fear could cause a "tsusami of job losses", particularly as new coronavirus restrictions hamper economic recovery.

"I don't think the Chancellor's minded to wholesale extend the furlough scheme, we are looking at the targeted measures," Foreign Secretary Dominic Raab told Sky News on Wednesday (23).

Sunak is said to be considering a wage subsidy similar to the "Kurzarbeit (short work)" system in Germany — which France, too, has adopted  — where the government tops up the pay of workers on reduced hours, according to news reports.

The option, they noted, also had the backing of UK trade unions and employers.

On being asked whether the German-style scheme was being considered, a government spokesman said on Wednesday: "We've always said that we will keep our support under review and that it would be adapted as the circumstances evolve, but there is a huge amount of support available and that continues to be the case."

Sunak had told Parliament last week that throughout the pandemic he had "not hesitated to act in creative and effective ways to support jobs and employment and will continue to do so".

Boris Johnson on Tuesday reiterated that Sunak was weighing his options, hinting that the he might unveil a "successor to the furlough scheme" in the coming days.

"I know that my right honourable friend the chancellor will be applying, as I say, his imagination and his creativity to helping those sectors in the months ahead," the prime minister told the House of Commons.

All eyes were on Sunak as Britain announced new restrictions on pub and restaurant opening times on Tuesday after a surge in Covid-19 cases in September and warned that the measures could last for six months.

That prompted warnings from the hospitality industry that more jobs could be lost, while other sectors such as airlines and airports have pleaded for sector-specific packages to help retain staff as the economic impact of the pandemic deepens.

Budget forecasters expected the furlough scheme to cost £54 billion over its eight-month lifespan. At its peak, the programme supported about nine million workers, and millions continue to rely on it.

Sunak, meanwhile, was also likely to extend the Treasury's business support loans programme to help companies affected by the coronavirus pandemic, the Financial Times reported late on Sunday.

The chancellor was expected to unveil plans to extend its four loan schemes for applications until the end of November, with banks allowed to process loans until the end of the year, the report said.