The TUC is calling on the Government to establish a permanent short-time working scheme as “a post-pandemic legacy” to help protect working people through periods of future economic change.

The TUC says the furlough scheme, while far from perfect, is one of the major successes of Government policy during the pandemic, protecting millions of jobs and livelihoods.

On the back of the success of the furlough scheme, the union body is urging Government to build on furlough – “not throw away its good work” – with a permanent short-time working scheme to make the labour market more resilient in times of change and crisis.

The union body adds that because of the UK's transition to net zero and the increased uptake of new technology, this is “hugely relevant”.

Case for a short-time working scheme
In a new report, Beyond furlough: why the UK needs a permanent short-time work scheme, the TUC says the case for a short-time working scheme is clear, citing significant benefits for workers, firms and Government. The union body says for workers, a short-time working scheme would:

• Reduce the risk of workers losing their jobs in times of crisis;
• Protect workers’ incomes – particularly as short-time working schemes are usually more generous than unemployment benefits; and
• Prevent widening inequalities – protecting women, disabled workers and BME workers who tend to lose their jobs first in a recession due to structural discrimination.

For the Government, it would:

• Protect against long-term unemployment, and the subsequent devastating impacts on communities;
• Help stabilise the economy, and encourage a faster economic recovery as workers continue to spend their wages; and
• Save money, as the cost of furlough schemes is often below the cost of unemployment benefits, particularly where costs are shared with employers.

For employers, the TUC says that such a scheme would produce significant savings on redundancy, training and hiring costs, as they enable firms to keep skilled workers on their books.

The union body points out that the UK is an anomaly among developed nations in having no permanent short-time working scheme to deal with periods of industrial disruption and weak demand.

In the OECD, 23 countries had short-time working schemes in place before the Coronavirus pandemic, including in Germany, Japan and many US states.

Turbulent times ahead
The TUC predicts that the UK economy is likely to face significant risks in the future – be it from climate change and the transition to net zero, new technologies such as AI, new variants or another pandemic. All could cause unpredictable and widespread disruption in the labour market, causing big spikes in unemployment and business failure.

The TUC cites failed attempts to manage industrial change in the past, which “left communities abandoned” and played a major role in widespread regional inequality.

The union body says that if the Government is serious about levelling up, it will put in place a permanent short-time working scheme to prevent inequalities spiralling, adding that a short-time working scheme could play a vital role in achieving a ‘just transition’ to net zero.

Criteria for accessing scheme
The TUC says the scheme should be governed by a tripartite panel bringing together unions, business and Government, which should be tasked with designing the criteria for the new scheme.

In designing the scheme, the TUC says the panel should take into account best practice from existing global schemes. The union body has set out the following conditions, which it says must be in place for accessing a short-time working scheme:

• Workers should continue to receive at least 80% of their wages for any time on the scheme, with a guarantee that no one will fall below the minimum wage for their normal working hours.
• Any worker working less than 90% of their normal working hours must be offered funded training.
• Firms must set out a plan for fair pay and decent jobs.
• Firms should put in place an agreement with their workers, either through a recognised union or through consultation mechanisms.
• Firms must demonstrate a reduction in demand – which can include restructuring.
• Firms should commit to paying their corporation tax in the UK, and not pay out dividends while using the scheme.
• The scheme should ensure full flexibility in working hours.
• There should be time limits on the use of the scheme, with extensions possible in limited circumstances.

TUC General Secretary, Frances O’Grady, said:

“Everyone deserves dignity and security at work. The pandemic shows how an unexpected economic shock can wreak havoc on jobs and livelihoods with little warning. In a changing and unpredictable world – as we battle climate change and new technologies emerge – a permanent short-time working scheme would help make our labour market more resilient and protect jobs and livelihoods.

“Too often in the past, periods of economic and industrial change have been badly mismanaged – increasing inequalities and leaving working people and whole communities abandoned. Setting up a ‘daughter of furlough’ to provide certainty to workers and firms through future industrial change would be a fitting pandemic legacy. Furlough has been a lifeline for millions of working people during the pandemic. Now is the time for the Government to build on the success of furlough with a short-time working scheme – not throw away its good work.”

Furlough warning
The call for a permanent short-time working scheme comes as the furlough scheme is soon to end, and employers are legally obliged to start consulting on planned redundancies with their staff. The rules around redundancy – for both employers and employees – are sometimes misunderstood and there are certain steps and processes that must be followed by law. The TUC is warning the abrupt end to the furlough scheme will cause unnecessary job losses and may harm the country’s economic recovery.

On the ending of the furlough scheme, O’Grady said:

“The jobs market is still fragile, with more than a million people still on furlough. An abrupt and premature end to the furlough scheme will needlessly cost jobs and harm our economic recovery. Instead of pulling the rug out from under the feet of businesses and workers, the chancellor must extend the furlough scheme for as long as is needed to protect jobs and livelihoods.”