Employers in struggling sectors are being forced to choose between workers, Labour is warning today, as the design of the Job Support Scheme means it’s more cost-effective for businesses where work has reduced to sack half their staff.
New analysis from Labour suggests that under the Job Support Scheme, employing two bar or restaurant managers part-time would cost £2,647.19 a month, made up of wage costs, employers national insurance and employer contributions to non-working hours.
But it would cost much less - £1,973 a month - to bring back one member of staff full-time, working more hours than two members of staff combined under the Job Support Scheme.
It means the scheme essentially gives employers, where work has reduced, an incentive to sack one member of staff for every two on the books, unless they want to fork out almost £700 extra a month.
It also means over the six months of the Job Support Scheme, an employer could spend on average over £4,000 for every one in two jobs they want to save. Meanwhile the cost of saving a bar staff job would be more than £500 a month, or more than £3,000 over the whole scheme.
Shadow Business Secretary Ed Miliband said: “Struggling employers where work has reduced have zero incentive to keep staff on, with it still being significantly cheaper to sack one out of every two members of staff. Businesses won't want to do this but the government is stacking the odds so it makes financial sense for them to do so. They’re essentially having to flip a coin to decide which person to lay off.
“The hospitality sector is already at huge risk of redundancies, operating at reduced capacity and on a shrunken income, hit by a 10pm curfew, and approaching a bleak Christmas season.
“Ultimately, the government has decided to accept mass unemployment in certain sectors – they have decided it is a price worth paying. It is the wrong choice for business, workers and our whole economy and society."
Jobs supported in hospitality across the South West (ONS)
| Area | Accommodation and food service | Licensed clubs | Public houses and bars |
| |
number | number | number |
| Bath and North East Somerset | 9,000 | 250 | 1,750 |
| Bournemouth, Christchurch and Poole | 18,000 | 500 | 2,250 |
| Bristol | 18,000 | 600 | 3,000 |
| Cornwall | 34,000 | 500 | 6,000 |
| Isles of Scilly | 300 | 10 | 40 |
| North Somerset | 8,000 | 150 | 2,000 |
| Plymouth | 9,000 | 350 | 1,500 |
| South Gloucestershire | 10,000 | 200 | 2,250 |
| Swindon | 7,000 | 200 | 1,250 |
| Torbay | 8,000 | 175 | 1,000 |
| Wiltshire | 18,000 | 500 | 4,000 |
| Devon | 37,000 | 600 | 8,000 |
| Dorset | 17,000 | 250 | 3,500 |
| Gloucestershire | 26,000 | 800 | 5,000 |
| Somerset | 21,000 | 600 | 5,000 |
