The Resolution Foundation think tank has published proposals for a £22 billion package to support workers facing lay-offs and families facing big income shocks.
The report calls on ministers to introduce a new Statutory Retention Pay (SRP) scheme that would help struggling firms prevent mass job losses in those sectors worst hit by the crisis, as well as wider financial support to families both in and out of work.
The system could be modeled on statutory maternity pay, the report says, so maintaining the link between employer and staff.
“Supporting a million workers via a flat-rate scheme of £151 per week for an initial six months would cost around £3.6 billion,” the think tank says, “while a more ambitious earnings-linked scheme, in which staff are paid at least two-thirds their typical salary, would cost around £8 billion.”
The report says unemployment benefits and Universal Credit should also be increased to £100 per week, at a cost of £10 billion. Uprating other working-age benefits by 10 percent would cost a further £3 billion, it says.
Lower earners are likely to be hit most swiftly, in stark contrast to the 2008 financial crisis. Sectors already heavily affected have typical weekly pay of £320, compared to £455 for the economy as a whole. Less than one-in-ten of those in the bottom half of earners say they can work from home, making it much harder for them to protect their incomes in the face of social distancing measures. Those in the most at-risk sectors and occupations also have less to fall back on, being around 25 per cent more likely than average to live in families with no savings at all.
Nye Cominetti, Senior Economist at the Resolution Foundation, said: “Today’s ONS figures are a stark reminder of how swiftly the world is changing. While the last few years have been spent discussing record employment, the focus for policy makers now must be rising unemployment. The absolute priority is much stronger action to cushion the living standards blow from a sharp economic shock.
“The shock to family incomes will go much broader than that driven by actual sickness itself, so the government should urgently build on welcome measures announced in last week’s Budget to support smaller firms, by ramping up the level of support for those losing or at risk of losing their jobs.”
