Over the past weeks, the FT has been full of articles on the efficacy or otherwise of the Treasury’s unprecedented financial support of businesses and employees, including 100 per cent guarantees on small business loans. Little is said about the hopelessly inflexible furlough rules (Report, May 6).
The Treasury sees businesses as binary. Furlough is compensated only if the employee totally ceases to provide any beneficial or productive effort or even any voluntary work for the employer. This works perfectly for a business that would otherwise make its staff redundant. The real world doesn’t work like that.
Most small businesses (and the charity I work for) have a few employees each working in a discrete activity: fundraising and or sales, accounts, IT, etc. With the lockdown, income and employee activity is down 20-80 per cent for most small businesses. It is critical to our survival that all employees continue working but they are not needed full-time.
Germany’s Kurzarbeitergeld compensates employers for putting workers on short-time, reducing their work hours as needed. This ensures that businesses continue to capture the valuable trickle of available income, employees do not become deskilled, the state’s compensation and social benefit costs are reduced, plus, it is able to glean some tax benefits.
It also ensures that these businesses bounce back quickly when the pandemic ends. Having failed to implement this in the initial phase, hopefully, the Treasury will consider implementing this when it takes this process to the next stage.
Imtiaz Dossa
London TW10, UK