UK to pay workers' wages as economy shuts down due to coronavirus

By Costas Pitas and Andy Bruce

 

FILE PHOTO: Chancellor of the Exchequer Rishi Sunak speaks during a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain March 17, 2020. Matt Dunham/Pool via REUTERS/File Photo

 

LONDON (Reuters) - Britain said it was taking the unprecedented step of helping to pay workers' wages in an attempt to prevent a surge in unemployment as companies grapple with the near shutdown of the economy due to the coronavirus outbreak.

 

"Today I can announce that for the first time in our history the government is going to step in and pay people's wages," finance minister Rishi Sunak said.

 

He said there would be no financial limit to the size of the plan.

 

Moments earlier, Prime Minister Boris Johnson ordered the closure of pubs, restaurants, gyms, nightclubs and other businesses for Friday as it ramped up the country's attempts to slow the spread of the virus.

 

Sunak said the government would give grants to cover 80% of a worker's salary if businesses kept them on staff.

 

"The economic intervention that I am announcing today is unprecedented in the history of the British state," he said.

 

Other measures announced by Sunak included an extra 7 billion pounds for the welfare system.

 

(Writing by William Schomberg; editing by Guy Faulconbridge)

 

-- © Copyright Reuters 2020-03-21

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we start to talk fairly large sums now if, as BJ says, the peak will be in about 12 weeks

does the chancellor have that in his vault

or is gonna loan them

or just print them?

 

Good job UK, other countries pay 60 to 75% of the wages.  Let's hope this will not last for 18 months or Boris might regret the decision. 

Edited March 21, 20206 yr by balo

And in two weeks my dependants allowance of 70 quid is taken away , pensioners dont count .

4 hours ago, melvinmelvin said:

we start to talk fairly large sums now if, as BJ says, the peak will be in about 12 weeks

does the chancellor have that in his vault

or is gonna loan them

or just print them?

 

There's printing and then there are the other options. They're all worse.

6 hours ago, melvinmelvin said:

we start to talk fairly large sums now if, as BJ says, the peak will be in about 12 weeks

does the chancellor have that in his vault

or is gonna loan them

or just print them?

 

Whatever it takes!

Will the unwashed, on zero hour contracts , have their wages made up ?.

 

This is not strictly true.

Your employer needs to apply for a government loan and uses that to pay the wages.

Afterwards your employer will have to pay back the government.

Thats my understanding of it.

10 hours ago, melvinmelvin said:

we start to talk fairly large sums now if, as BJ says, the peak will be in about 12 weeks

does the chancellor have that in his vault

or is gonna loan them

or just print them?

 

Massive borrowing involved but justifiable in these circumstances.  The balance here is to try to avoid a full on depression rather than a manageable recession.  By shoring up companies and keeping them ticking over, the government also avoids massive unemployment and the costs that that incurs.  Paying 80% of employees wages is fair given that the unemployment payments would be off of the scale if everyone lost their jobs.

 

We are in unpredictable times and nobody really knows for how long.

8 hours ago, balo said:

Good job UK, other countries pay 60 to 75% of the wages.  Let's hope this will not last for 18 months or Boris might regret the decision. 

Boris has little choice and it is possible that it will last longer than anyone expects.  But we all need to stop bickering about maybes and support what the government are trying to do.

9 minutes ago, dunroaming said:

Boris has little choice and it is possible that it will last longer than anyone expects.  But we all need to stop bickering about maybes and support what the government are trying to do.

Agreed he is doing a great job at the moment and listening to calls on LBC phone-ins he is bringing the country with him. Desperate times call for desperate measures and national unity and local networks of volunteers and pulling together. 

 

Edited March 21, 20206 yr by URMySunshine

11 minutes ago, dunroaming said:

Boris has little choice and it is possible that it will last longer than anyone expects.  But we all need to stop bickering about maybes and support what the government are trying to do.

Have to say, so far so good and the new Chancellor is doing a grand job even if his strings are being pulled elsewhere. 
 

Ive never been a fan but credit where it’s due. 

9 minutes ago, URMySunshine said:

Agreed he is doing a great job at the moment and listening to calls on LBC phone-ins he is bringing the country with him. Desperate times call for desperate measures and national unity and local networks of volunteers and pulling together. 

 

On a local level many are stepping up to the plate with formula one now turning their hand to manufacturing ventilators for the NHS.  We have several initiatives near where I live shopping for the elderly and dog walking for those who need it.  Local plumbers and electricians offering to come out for the elderly or infirm completely gratis.  Even most banks and credit card companies are temporarily scrapping late payment charges.  It feels like people are genuinely wanting to help each other,  a world away from the vitriol over the dreaded Brexit!

 

Nothing like a national tragedy to bring the best out of the Brits.

3 hours ago, Rookiescot said:

Your employer needs to apply for a government loan and uses that to pay the wages.

Afterwards your employer will have to pay back the government.

Thats my understanding of it.

Not true, this is a grant, not a loan. 
The main difference between a grant and a loan is repayment. A loan requires you to repay the money you borrow, whereas a grant does not.  

Edited March 21, 20206 yr by balo

Might not seem important to some but the elderly lock in becomes 100% then Boris and Co should have a word with the BBC re' TV licence ie no letters saying you must pay now blah blah and also net providers should give the old stuck at home people a break for a good while.

20 hours ago, dunroaming said:

Massive borrowing involved but justifiable in these circumstances.  The balance here is to try to avoid a full on depression rather than a manageable recession.  By shoring up companies and keeping them ticking over, the government also avoids massive unemployment and the costs that that incurs.  Paying 80% of employees wages is fair given that the unemployment payments would be off of the scale if everyone lost their jobs.

 

We are in unpredictable times and nobody really knows for how long.

Haven't heard much from any of the unions on putting anything in from their coffers filled by the workers or are they all broke Dear Jeremy??

19 hours ago, dunroaming said:

On a local level many are stepping up to the plate with formula one now turning their hand to manufacturing ventilators for the NHS.  We have several initiatives near where I live shopping for the elderly and dog walking for those who need it.  Local plumbers and electricians offering to come out for the elderly or infirm completely gratis.  Even most banks and credit card companies are temporarily scrapping late payment charges.  It feels like people are genuinely wanting to help each other,  a world away from the vitriol over the dreaded Brexit!

 

Nothing like a national tragedy to bring the best out of the Brits.

Private hospitals are also releasing IC beds for NHS use but no doubt at a cost.

On 3/21/2020 at 4:19 PM, dunroaming said:

Massive borrowing involved but justifiable in these circumstances.  The balance here is to try to avoid a full on depression rather than a manageable recession.  By shoring up companies and keeping them ticking over, the government also avoids massive unemployment and the costs that that incurs.  Paying 80% of employees wages is fair given that the unemployment payments would be off of the scale if everyone lost their jobs.

 

We are in unpredictable times and nobody really knows for how long.

The choice is pretty simple. Six months of wage subsidies versus perhaps three of four years of mass unemployment payments and a decimated corporate and income tax base to pay for them. 
 

 

15 hours ago, overherebc said:

Haven't heard much from any of the unions on putting anything in from their coffers filled by the workers or are they all broke Dear Jeremy??

Chump change a thimbleful of water to put out a raging economic fire.