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'Sunak scheme an incentive to sack people,' warns Labour

RISHI SUNAK’S new job-support scheme (JSS) will incentivise employers in struggling sectors to sack half of their staff, Labour claimed last night. 

The party warned that the design of the Chancellor’s scheme, due to replace the job-retention scheme next month, will make it more cost-effective for businesses hit by a downturn to sack one in every two workers.    

This will particularly affect the hospitality sector as it heads into precarious winter months, the party claimed. 

Announced last week by Mr Sunak, the JSS will be available for six months to all those working at least a third of their usual hours when furlough ends on October 31. 

The JSS is considerably less generous than the original scheme, with government contributions capped at £697.92 a month compared to the current £2,500.

Under the new scheme, for an employee working at least 33 per cent of their usual hours, the employer has to pay 55 per cent of costs, with the government providing a further 22 per cent. 

The Chancellor claims the scheme will prevent a wave of redundancies,  but critics were quick to point out that under the JSS employers will pay more to keep on several staff part-time than to fewer working full-time. 

Analysis by Labour released yesterday estimates that it would cost £2,647 a month to employ two bar managers part-time under the scheme, while retaining one manager full-time would cost £1,973  –about £700 less.

The calculation was arrived at by adding together the cost of hours worked, national insurance contributions and the sum of 33 per cent of non-working hours, which under the JSS must all be covered by the employer. 

Shadow business secretary Ed Miliband said this will force businesses to sack staff because it “makes more financial sense to do so.”

He said: “Struggling employers have zero incentive to keep staff on, it still being significantly cheaper to sack one out of every two members of staff. 

“They’re essentially having to flip a coin to decide which person to lay off.

“Ultimately, the government has chosen to accept mass unemployment in certain sectors, deciding it is a price worth paying.”

A Treasury spokesperson told the Morning Star: “This makes sense on a spreadsheet but is economically illiterate in the real world. 

“For employers the value in the scheme is the flexibility to change working patterns by the week and the value they get from retaining their skilled and experienced workforce. 

“They also save the very considerable cost that come from staff turnover. That’s why this scheme was advocated by business and why they welcomed it last week.”

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