- ‘Job Support Scheme’ means some struggling businesses face
the prospect of sacking one member of staff for every two on the
books
- The hospitality sector is particularly threatened by scheme's
design as a bleak Christmas period approaches
- More cost-effective for hospitality businesses to lay off
half their staff – or pay £700 a month for each job they want to
save
Employers in struggling sectors are being forced to ‘flip a coin’
and choose between workers, Labour is warning today, as the
design of the Job Support Scheme means it’s more cost-effective
for businesses where work has reduced to sack half their staff.
This will be a particular problem for businesses in the
hospitality sector, already facing a bleak winter season and
shrinking incomes.
New analysis from Labour can reveal that under the Job Support
Scheme, employing two bar or restaurant managers part-time would
cost £2,647.19 a month, made up of wage costs, employers national
insurance and employer contributions to non-working hours.
But it would cost much less - £1,973 a month - to bring back one
member of staff full-time, working more hours than two members of
staff combined under the JSS. That means the scheme essentially
gives employers where work has reduced an incentive to sack one
member of staff for every two on the books, unless they want to
fork out almost £700 extra a month.
It also means over the six months of the Job Support Scheme, an
employer could spend on average over £4,000 for every one in two
jobs they want to save. Meanwhile the cost of saving a bar staff
job would be more than £500 a month, or more than £3,000 over the
whole scheme.
The government’s argument that the Job Retention Bonus will
provide an incentive to retain staff will be little consolation
for the hospitality sector. The extra £1000 from keeping on two
members of staff rather than one is just a fraction of the extra
costs they face and will only be paid at the end of January 2021-
far too late for hospitality businesses struggling to make ends
meet through a bleak winter. Even if an employer is able to
secure the £1,000 bonus in January, over the six months of the
JSS scheme, the net cost to them of keeping an employee on would
be an average of £508 a month.
Labour has called for a Job Recovery Scheme which would actually
provide businesses with the incentives to keep staff on, not
stack the odds against them so it makes more financial sense let
staff go.
MP, Labour’s Shadow Business Secretary
said:
“The Government presents the Job Support Scheme as a measure that
will save jobs. But the facts tell a different story.
“Struggling employers where work has reduced have zero incentive
to keep staff on, with it still being significantly cheaper to
sack 1 out of every 2 members of staff. Businesses won't want to
do this but the government is stacking the odds so it makes
financial sense for them to do so. They’re essentially having to
flip a coin to decide which person to lay off.
“The hospitality sector is already at huge risk of redundancies,
operating at reduced capacity and on a shrunken income, hit by a
10pm curfew, and approaching a bleak Christmas season.
“Ultimately, the government has decided to accept mass
unemployment in certain sectors – they have decided it is a price
worth paying. It is the wrong choice for business, workers and
our whole economy and society."
Ends
Notes to Editors
- Under the Job Support Scheme, for an employee working a third
of their usual hours, the employer would have to pay 55% of
costs, with the Government providing a further 22%. The employee
would therefore receive 77% of their usual pay.
- According to the Annual
Survey of Hours and Earnings 2019, the median
full-time salary for catering and bar managers is £420.60 per
week (£1,822.60 a month). Adding employers national insurance,
it costs £455.30 a week (£1,972.96 a month) to employ one
member of staff full-time. Under the Job Support Scheme,
employing two bar managers part-time would cost £610.89 a week
(£2,647.19 a month), made up of £420.60 in wage costs, £50.10
in employers national insurance and £140.20 in employer
contributions to non-working hours.
- The JSS will last for six months. The average cost over 6
months of keeping one member of staff (catering or bar manager)
on full-time would be £11,838. The average cost of keeping two
staff on part-time over 6 months under the JSS would be £15,883.
The difference between these costs is £4,045.The employer could
be eligible for the Job Retention Bonus, but even factoring that
in it would reduce the difference between the two when spread
over six months of the scheme from £674.26 a month to £508.
- The median full-time salary for bar staff is £334 per week
(£1,447.33 a month). Adding employers national insurance, it
costs £356.77 a week (£1,546 a month) to employ one member of
staff full-time. Under the Job Support Scheme, employing two bar
staff part-time would cost £475.50 a week (£2,060.50 a month) – a
difference of £514.50.
