Why Britain Does Not Want Something Similar To Kurzarbeit?

 As Britain decided to exit the European Union and go it’s independent way, its policies resonate with a harsh and myopic stand towards its own. The country is reeling under consistent job cuts post the pandemic lockdown.  With its furlough scheme not extending beyond August, there is no respite to the unemployment nightmare staring the Britons in their faces.

But what is going to hit the Britons is more of insecurity, frustration, and a sense of uncertainty, as there are chances of the second wave of Coronavirus attack in the country. The reputation of the NHS was tarnished as its handling of the mayhem was not an impressive show.  The pandemic in fact had put the whole country’s medical infrastructure to test and brought out in the open major loopholes when it came to the welfare of the elderly of the population.

Unlike Britain, Germany is being more compassionate and responsible for its own. Their conventional Kurzarbeit program that was introduced in 2009, has been working well for the Germany working class. It is being considered as an excellent financial crisis tool and has been used in some other countries like Austria and Romania under different names with the same nomenclature.

The International Monetary Fund defines the employment scheme, “Kurzarbeit is a social insurance program whereby employers reduce their employees’ working hours instead of laying them off. Under Kurzarbeit, the government normally provides an income “replacement rate” of 60 percent (more for workers with children).”

So, technically, an employer is preventing a worker from losing a job, but has the opportunity to work lesser hours and can claim 60percent of wages over the lost hours.  This slow-moving system has currently supported 5.6 million jobs.  This has reduced from a peak of 7.3 million in May. Berlin is now willing to continue the support system for its working-class till 2022. It has already cost them £9 billion and the same amount is expected to be borne by the government again.

But the British government, according to chancellor Rishi Sunak might not want to show such clemency to its working class. Since March, when the furlough scheme was introduced, as many as 9.6million people have benefited from this government scheme. However, Britain does not want to extend the scheme anymore. Under the furlough scheme, an employer can ask an employee to stay home and not report for work, while he does get 80 percent of his pay for this period.

Come July, many could go back to part-time work. However, many employers are still opting to lay off if need be. On its part, the British government does not feel an extended furlough is a good thing for workers sitting at home. From a societal health perspective, Sunak echoes Andrew Bailey, the governor of Bank of England’s sentiment that, “it is unhealthy for people to remain away from the jobs market for long periods, and that it is better for them to find work in parts of the economy that are coping better with the “new normal” of physical distancing.”

Economists however believe that Britain could extend its furlough scheme and set precedence.  In terms of cost to the exchequer, it wouldn’t cost more than £10 billion, according to the independent think tank, the National Institute of Economic and Social Research.  The NIESR also estimates, that closing the furlough scheme would mean driving the numbers of unemployed up to 1.2 million by Christmas this year.  One of the oldest British think tanks, they have said, that this cost would eventually pay off itself because furloughed workers will still be paying their taxes, will, therefore, be more likely to spend in the economy with income from the scheme, and would thus not need to receive unemployment benefits either.

Britain has not made wise decisions over its schemes since its exit from the European Union. Earlier on, PM Boris Johnson had almost opened a death trap for the Britons when he decided to move ahead with the herd immunity strategy to handle the pandemic. He was severely criticized for bad leadership then. The disastrous management of the pandemic has already put Britain on a world map (for the wrong reasons).  With the furlough scheme going away, the living conditions for Britons couldn’t have been gloomier than ever before.

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