The Job Support Scheme announced by the Chancellor of the Exchequer on 24^th September is a form of short-time working subsidy found in countries such as Germany and France. If an employee’s working hours are reduced and thereby their pay, the state will make up a third of the lost earnings and the employer a further third. In summary, the scheme is designed to distribute available work over a larger group of workers than would be the case otherwise thereby helping to offset any increase in unemployment resulting from the pandemic.

There is something unusual in the Job Support Scheme: it potentially increases the employer’s labour costs. Take the following example as an illustration.

Someone working 40 hours a week for ₤12.00 an hour has their hours of work reduced to 24 a week. This means that the weekly wage will reduce from ₤480 to ₤288. The employer will pay a third of the employee’s lost earnings (₤64) and the state a further third. The impact of this is to increase the employee’s hourly rate from ₤12.00 to ₤14.67; an increase of 22 per cent. If this were maintained over six months, to when the scheme is currently scheduled to end, the employer will have ended up paying an additional ₤1,651 to the employee for hours worked.

It is hard to escape the fact that it will be cheaper for the employer to retain as many employees working their usual hours and not use of the scheme, and make the others redundant. Of course redundancy costs and potential income from the Job Retention Bonus for previously furloughed employees may offset the employer’s additional hourly labour costs from using the scheme. Plus the employer will retain a full complement of skilled employees to take advantage of the eventual recovery thereby avoiding future recruitment costs or those which result from difficulties finding people with the right skills.

Nevertheless, the potential effectiveness of the Job Support Scheme would appear to be finely poised between success and failure simply because it requires employers to increase their hourly labour costs.

Warwick IER was commissioned by Skills Development Scotland (SDS) to advise on how incentives can support employer apprenticeships during and beyond the Covid-19 crisis.

The study involved an international review of evidence on the financial and other incentives countries use to stimulate employer investment in apprenticeships. It explored: (a) where employer incentives have worked best; (b) how they were targeted; (c) which instruments were used; and (d) the risks and opportunities of different incentives.

The report provided an assessment of how incentive best practice might be applied in Scotland the short-, medium- and longer term, based on an analysis of Scottish apprenticeship data and consultations with international Vocational Education and Training (VET) experts.

Director of IER, Chris Warhurst, gave a keynote talk in August on the need for governments to develop a balanced economic recovery and growth policy that

The talk – ‘Keeping the faith: Covid, job quality and workplace management practices’ – was delivered to the Cedefop, Eurofound and IZA Conference on Workplace and Management Practices on 21 August 2020 promotes both job creation and job quality in the face of the looming jobs crisis post-Covid.

The hospitality sector has been hit hardest by Covid-19 in Australia. Sally Wright and Chris Warhurst of IER will be working with Angie Knox of Sydney University to develop a new measure of the impact of Covid-19 on job quality in the Australian hospitality industry. The aim is to help government develop policies to ensure a sustainable recovery for the sector.