It’s as if an economist had never heard of labour hoarding, or of recruitment and training costs. Indeed, had not heard of Ford and his $5 a day:
But this means wage cost per employee time worked has gone up by a third when the business is facing a massive downturn in its business and threat to its survival or it would not be thinking about doing this. Wage cost to the business is now £13,333.
So rationally, any business that knows this might last for at least six months, as the government says we should expect, will look at this scenario and sack half its employees and get the same work for much less cost.
In fact, any business facing this situation will probably have no choice but sack staff and nit use this scheme if it is to survive. That’s because any scheme like this is an invitation to make people redundant, and not a job retention scheme.
Let’s sincerely hope that Sunak does not deliver this CBI created idea.
It’s even as if a commentator on current politics and economics was unaware that this is the German scheme so praised by so many.