“Our response must be comprehensive.”
“This is a time to be bold.”
“We will support jobs, we will support incomes, we will help protect your loved ones, we will do whatever it takes.”
Big promises were made by the Chancellor Rishi Sunak in his speech to parliament earlier this week about the government’s economic response to the coronavirus pandemic. But, while £330 billion worth of loans were made available to business, protections for workers were kicked down the road – and days later millions who are losing hours and jobs are still waiting to hear what they might be.
There is little excuse for this delayed response. The first coronavirus case was reported in Norway on February 26th, in Denmark on February 27th and in New Zealand on February 28th. All three of these countries have produced packages to protect jobs and wages. Yet Britain still hasn’t. Its first case was reported on January 31st.
Denmark’s model remains the gold standard for how to deal with the economic fallout. This weekend, the Danish government brought unions and business leaders together and agreed a deal which would cover workers’ wages (75% by the state, 25% by the employers) in exchange for workers giving up five sick days and a commitment from employers not to lay anyone off.
It wasn’t perfect – additional supports will still be needed to cover the self-employed and zero-hour workers – but it was a serious attempt to prevent mass unemployment and economic chaos. Direct measures to protect jobs and wages are also the only way to ensure that workers follow public health advice. Without them, companies will continue to insist that people come into work and workers, especially those on lower incomes, will be obliged to follow.
Contrast Denmark’s approach with Britain’s. Whereas Denmark tied its state support to job protection conditions, Britain announced its supports for business first and without strings attached. This makes it almost impossible to ensure that layoffs are avoided. Britain appears to be taking a voluntarist approach to the problem – with Economic Secretary John Glen saying today that he “hoped” the government’s loans would be used to save jobs, and putting his faith in the good will of businesses.
This voluntarist approach is replicated when it comes to rents. Instead of suspending rents – as countries across Europe are moving to do – the government yesterday said it would “issue guidance which asks landlords to show compassion.” Landlords, it said, should “reach out” and show “understanding” to their tenants. Today, it took the same approach to energy bills, urging customers to “speak to their supplier about options” the government was facilitating – but not following the examples of countries like Italy which have suspended household bills for the duration of the crisis.
It’s worth laying out why emergency measures are so urgent. At the moment, Statutory Sick Pay is only £94.25 per week for workers who have to self-isolate. And it isn’t even available to lower-paid workers, those on zero-hours or the self-employed. But this crisis has moved beyond just those who are directly impacted by coronavirus. Millions of workers in sectors like hotels and restaurants (5 million), tourism (1.7 million) and events (530,000) have seen their jobs almost disappear overnight. They are not sick – it’s an economic contagion that’s hitting them.
Today in parliament it was clear that even Tory MPs could see how inadequate the government’s response was. Former Business Secretary Greg Clark echoed what Tribune has been saying for nine days: “if the government doesn’t act immediately large numbers of people will be unemployed.” A recent poll from the United States found that 18% of workers had lost hours or jobs already. The US is days behind Britain in terms of a shutdown, and there’s every reason to believe that figure is higher here.
So why has the government’s response been so slow? Two answers are clear – first, they hadn’t planned for a recession, even though it has been clear one was coming for more than a week; and second, they have prioritised bailing out business at the expense of protecting working people.
But there is a third answer, which Sunak hinted at when responding to Labour Shadow Chancellor John McDonnell on Tuesday: other countries had legislative frameworks in place (for instance, Denmark’s sectoral collective bargaining) whereas Britain had to explore these options anew.
It seems increasingly clear that legislative complication is the crutch that the government will rely on to evade criticism over its failure to produce any serious package which might protect jobs and wages. It is, however, a weak defence. If it was possible to bring forward a package to inject £330 billion into the economy for business, it should be possible to bring emergency legislation forward for workers – during the last economic crisis, legislation was generated in a matter of hours when necessary. Other countries have managed it: the income protection plan announced by New Zealand this week had no previous statutory basis.
In fact, there is considerable evidence that existing legislation could have been used at least at the start to put in place emergency measures. Take one example: a code of practice could have been published by the HSE under the Health and Safety at Work Act. This could have required the suspension of large numbers of workers whose continued working would have been a risk to public health. Then, by an order of the Secretary of State under the Employment Rights Act, these workers could have been guaranteed their normal weekly earnings up to £525 per week.
The decision to reject options like this and instead sit by while millions of workers were forced to continue working today at the expense of public health tells a story of a government whose response to the coronavirus pandemic has been to delay, dither and divert at every opportunity. But even for seasoned messers like Boris Johnson the time for that approach is fast running out. Unless action is taken within hours to protect jobs and wages, Britain could find itself spiralling into an economic blackhole – with social chaos to match the kind rapidly developing in its hospitals.