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Coronavirus: UK government set to announce worker wage package rescue plan

Lianna Brinded
Head of Yahoo Finance UK
UK prime minister Boris Johnson, right, with chancellor Rishi Sunak during a daily coronavirus briefing inside number 10 Downing Street in London on March 17. (Getty)

UK chancellor Rishi Sunak is set to announce a rescue plan to protect millions of jobs, which will include an employment and wage subsidy package.

The UK government and worker union leaders had talks that went into the night, according to the BBC.

One proposal under discussion is that the government will cover 75% of salaries at private companies for three months, if firms promise not to let staff go.

Earlier this week, the Resolution Foundation think tank said that UK government should introduce new rights for workers and pay their wages if firms struggle to do so during the pandemic.

It said that employees should be entitled to a new ‘statutory retention pay’ (SRP) if work dries up because of the virus but employers wish to keep them long-term. Staff would receive at least two-thirds of their wages, with the state refunding much of the costs.

Read more: Coronavirus: Prime minister Boris Johnson tells firms 'stand by workers'

It would also help prevent a damaging rise in unemployment that could disrupt firms and leave long-term scars.

This week, the government unleashed an ‘unprecedented’ set of financial measures to help the UK economy tackle the impact from the coronavirus.

The package is worth 15% of UK GDP, up from a package announced last week worth 1% of GDP, and includes £330bn ($388bn) government-back loans and guarantees. 

Read more: UK chancellor under fire for promising firms £330bn but families £500m

But Resolution Foundation argues that the government’s plans to provide bridging loans are “unlikely to be sufficient” as firms cannot be sure a downturn will only last a few months. Firms are particularly likely to shed jobs and consumers to slash consumption if they have no idea how long disruption will last, which itself “risks a much deeper downturn.”

On 19 March, UK prime minister Boris Johnson said, in a daily coronavirus briefing, urged businesses considering laying off staff to “stand by your workers” during the coronavirus pandemic.

“I say to business — stand by your employees, because we’re going to stand by you,” said Johnson.

Read more: Coronavirus: New rights for workers could prevent mass job losses

He added that previous governments had been accused of bailing out the banks during the 2008-2009 financial crisis but “didn’t look after the people who really suffer.”

“This time it’s going to be different,” he said at the televised briefing. “We’re going to make sure we look after the people who really suffer from the economic consequences of what we ask them to do.”