A BLITZ of good news stories about the UK Government’s job furlough scheme emerged from Number 11 Downing Street on its final day for new applicants – among them, that 750,000 Scottish jobs have been saved since the onset of the crisis, According to UK Chancellor Rishi Sunak.
The scheme, which covers almost nine million UK workers (around one in four), was announced on 20 March by Sunak, and will provide grants to bosses worth 80 per cent of the wages (up to £2500 per month) of registered workers until the end of October (before the point when a phased shift will have taken place, with bosses making up more of the 80 per cent).
The scheme always suffered from substantial loopholes. In particular, it cruelly excluded the proliferation of freelance work, self-employment (much of it subsistence level or bogus) and small firms encouraged in previous rounds of Conservative policy. A scheme for the self-employed eventually received 2.6 million claims, but only after considerable losses.
11 June is the final day for new applicants to be added to the furlough scheme. But with the unprecedented policy winding down, does this mean that we can expect an end to job losses?
Mass unemployment
It must first be acknowledged that the furlough scheme did not stop businesses shedding jobs completely. Sometimes this was because small businesses, laden with debt or without the capital to survive the business drought despite government assistance, collapsed with the loss of employment.
But often huge corporations in receipt of massive public funds have continued to slash jobs based on future projections for the market. When Easyjet announced that it would be cutting around 30 per cent of its workforce, around 4,500 workers, it explained that by its own calculations the company would not return to its 2019 capacity until 2023. Thus the £600 million thrown into the corporation by the state, and its much heralded expansion in Scotland, did nothing to curb its own opportunism.
No 11 press relations aside, a slew of bad jobs news came as the furlough scheme stopped taking on new workers: Energy corporation Centrica announced 5,000 fresh job losses, Heathrow airport announced that as many as 25,000 jobs were at risk at the UK’s largest airport, Nissan laid off 248 workers at its Sunderland plant, 400 jobs disappeared at Bombardier in Northern Ireland. These and many other job cuts were announced within hours of the furlough scheme deadline.
Job losses were announced across the retail sector as well. On 10 June 3,000 jobs were cut by the Restaurant Group, owners of Frankie Benny’s among others.
With grim predictability, new figures from the Office of National Statistics (ONS) found that young (under 30) workers were the most likely to suffer under furlough and unemployment. During lockdown, private renters spent 61 per cent of their total incomes on ‘essentials’ such as food and heating, compared to 53 per cent for home owners. In other words, the conditions in the new jobs market are deepening existing inequalities in the population.
The press gang and the spending spree
As the furlough scheme closed, Sunak addressed the the Tory 1922 Committee where backbench MPs called for an end to the two-meter distancing rule, and also for a public spending spree in order to boost the badly dampened economy.
This is the emerging model for re-organising the economy. It is to become the responsibility of a public still reeling from the Covid19 economic shock, and still in danger of to re-inflate the economy.
The class character of the debt economy is being brought sharply into focus. Poorer, younger, and renting workers have suffered a major shock to their private finances. Meanwhile, more secure home owning workers have made substantial savings during lockdown restrictions. In April alone, UK households paid-off £7.4 billion in consumer credit – the largest amount since records began in 1993.
But more profoundly, big business is not expected to take part in this new glut of spending. Sluggish investment by big business, a characteristic feature of modern British capitalism, is expected to reach new depths in coming months. Analysis by stockbroker Peel Hunt suggests cancelled investments by businesses has reached £23 billion. This adds weight to claims by Tej Parikh, chief economist for the Institute of Directors business lobby, that the end of the furlough scheme will be met by job cuts, not fresh rounds of investment in job creation.
This all underlines the suspicion from March, that the furlough scheme was always about maintaining the ‘fundamentals of the economy’ – capital. Labour is a variable. The question that haunts Conservative policy-makers remains: have millions grown used to a measure of state protection they never before experienced, and how will they respond to the new precarity?