Coronavirus: how UK job retention plan borrows from collectivist Europe

Matt Dunham / EPA

Coronavirus combines a public health and socioeconomic crisis. The crisis is distinct from those in the past, as work now has to be reduced, not extended.

Banks were bailed out after the 2008 crisis – now is the time for a workers’ bailout. Only the state has the firepower. And coronavirus has compelled the UK’s Conservative government to countenance collective interventions not normally associated with tories.

On March 20, UK Chancellor Rishi Sunak announced an “unprecedented” job retention scheme: the state will pay employers a grant of 80% of workers’ wages (maximum of £2,500 per month) if firms retain employees. It shows how important trade unions remain, because European-style wage subsidies were advocated by the Trades Union Congress in discussions with government and employer groups.

Major crises like the great depression, world war two, the 2008 financial crash and now Covid-19, all necessitate massive state intervention, collective policy solutions and new institutions – like the NHS/welfare state built by a socialist Labour government after world war two.

Countries like the UK and US, which are more individualist and favour the free market are less equipped to protect both workers and unemployed people than more collectivist European countries. Britain’s social institutions have severely atrophied: trade unions have declined, while public services and the welfare state have been eroded by ten years of austerity imposed by Conservative governments. Over a longer period, 40 years of neoliberalism has led to deregulated labour markets and considerable increases in precarious jobs now most vulnerable to Covid-19.

Are worker protections sufficient?

The UK government reaction has been too slow. The vital new job retention scheme is backdated to the start of March, but it will take weeks to set up and pay the first grants. Many people will have been sacked by then. Also, money does not go directly into workers’ pockets (employers apply for it).

More generally, there are evidently wide variations in employers’ responses to Covid-19: notably between responsible compassionate employers who consult workers, and exploitative ones who breach health and safety and silence worker concerns.

Closed for coronavirus. Nick Potts / PA

Previously, on March 17, the chancellor announced a package assisting businesses, including £330 billion in loans. Nevertheless, big business bailouts should be conditional on social commitments like fair pay/tax and worker representation.

The Labour party and the Trades Union Congress, among others, urged the government to enact bold policies: including wage subsidies, increased statutory sick pay and social security benefits, easing debts, help with rental costs/bills. Of note were Labour proposals for the state to pay up to 90% of wages (but directly to workers), with employers paying the remainder, and increase statutory sick pay to the real living wage.

The chancellor promises to raise Universal Credit by £1,000 per year, and extend statutory sick pay to the self-employed. However, Conservative assaults on the welfare state have left benefits far below other Western European countries. They are insufficient to live on, given cost of living increases (especially housing).

Excludes insecure self-employed & casual labour

Vital though the government’s wage subsidies for employees are, they do not (yet) protect the most insecure of the 5 million self-employed and casual workers. This is one reason political pressure is mounting for a universal basic income to pay every adult a flat, unconditional sum of money while the crisis persists. Advocates see this as a vital way to compensate people who need to stay home in a pandemic – to give low-paid people, especially, security to not have to work.

Self-employed workers are in a precarious position. DC Studio / shutterstock

Worker protection in European states

Capitalism is a global economic system, but substantial variations persist between different countries and their institutions. Those European states that are most unionised and collectivist and have the most developed welfare states offer greatest protection to workers.

In part, they achieve this through tripartite bargaining with unions and employer associations, and it is noteworthy that the UK chancellor also held discussions about Covid-19 with unions and employer groups, resulting in the new employee protection measures. It’s not yet clear whether this tripartite “social partnership” is a one-off or if it will gain traction in the longer term. Other European countries have been doing tripartite bargaining for decades, most recently in response to Covid-19.

In Denmark, the government and social partners agreed national short-time working protections: the state will pay 75% of wages for three months if employers do not lay off employees. Employers will cover 25% of the wages and workers will cover 5% by taking five days fewer holiday. In Sweden, laid off workers are guaranteed 90% of wages: half paid by government, half by employers. In Norway, workers are entitled to 100% wages for 20 days (18 days paid by government and two by the employer), then 80% onwards; the self-employed are also protected. In Germany, the government will pay 60% of net wages, or 67% for working parents. In Austria, a short-time working package guarantees a net replacement wage of 80-90%.

The UK has been slower than many European countries in responding to Covid-19. A collectivised workers’ bailout is crucial. When the pandemic disappears, there are no political excuses for not rebuilding the welfare state and improving employment conditions and rights for all workers.

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