By Sophie Squire
Downloading PDF. Please wait... Issue 2697

Tory wages plan subsidises the bosses—not workers

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Issue 2697
Chancellor Rishi Sunak (left) and Bank of England governor Andrew Bailey
Chancellor Rishi Sunak (left) and Bank of England governor Andrew Bailey

Tory chancellor Rishi Sunak announced a scheme to subsidise wages that was hailed as a total transformation in policy last week.

But the details showed that it’s far less generous than it might have seemed.

Sunak said the state would pay companies to stop them sacking workers at 80 percent of each employee’s salary up to £2,500 a month.

He said the plan was an “unprecedented, economic intervention” by the state. It came only days after a £350 billion bailout for bosses.

The scheme is a departure from Tory free market orthodoxy—and shows a forest of “magic money trees” can quickly be found to save ­capitalism.

But there are major problems.

The money goes to bosses, not directly to workers. They fill out a form that describes their workers as “furloughed”—temporarily sacked. The state will hand over 80 percent of their wages. There is no ­instruction for bosses to pay the other 20 percent.

There also remains a gap in the coverage of statutory sick pay for two  million self-employed people with low earnings. If workers don’t have the wages or ­benefits that they and their families need they will continue to work even if they are ill or need to self-isolate.

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People on zero hours ­contracts, precarious ­workers and freelancers may not be covered. In sectors that are more casualised bosses may just lay off workers without bothering to apply for the scheme.

The IWGB union said, “The 80 percent wage subsidies offered by the government to businesses to keep people employed discriminates against ‘gig-economy’ and other self-employed workers, who are not included.”

Sunak’s statement ­mentioned helping renters. But this was centred on ­raising benefits, not ­suspending rents.

The government has not yet demanded stakes in firms or wholesale state ownership in exchange for the cash. They are handing over a sum equivalent to hundreds of ­billions for nothing in return.

On Monday the ­government suspended the rail franchise system in a move that effectively nationalises any losses by railway companies for the next six months.

But after that the ­privatisers might just get them back. And during this period they get a guaranteed “management fee”—profit.

TUC union federation general secretary Frances O’Grady said the plan was a “breakthrough” and that Sunak had shown “real leadership”.

“We’re glad he’s listened to unions and taken vital steps to support working families,” she said. Unite union leader Len McCluskey praised it as “bold and very much necessary”.

Union leaders are wrong to back a Tory chancellor who delivered only limited assistance—through bosses—and will savage workers once the emergency lifts.

We need to keep up that fight to demand workers aren’t made to suffer at the hands of this crisis.

Self-employed let down

Rishi Sunak’s scheme also doesn’t reach most of the 15 percent of the workforce who are self-employed.

This is a mixed group which has grown as people have found it harder to get stable employment with proper contracts.

Analysis by the Institute for Fiscal Studies showed that about a third had taxable income of less than £10,000 a year. A small number of high-earning partners in professional firms rank among Britain’s top 1 percent by income.

Unless Sunak shifts the scheme under pressure, they will only be eligible to apply for the Universal Credit benefit.

Philippa Childs, head of the Bectu broadcasting union, called it a “devastating blow” for such workers.

“The chancellor has badly let workers down,” she added.

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