UK firms to be asked to pay part of furloughed staff’s wages from August

Businesses will have to pay at least a fifth of the wages of furloughed employees from August, it has been reported.

The chancellor, Rishi Sunak, is expected to announce next week that employers will have to begin contributing as the lockdown is further eased, according to the Times.

Employers will be permitted to take furloughed workers back part-time, and all employers using the coronavirus job retention scheme will be required to make the payments, even if they remain closed, according to the paper.

The Treasury said it was “not steering away” from the story, which is understood to have been briefed by officials, and it did not deny its accuracy.

A Treasury source told the Times: “We’ve got two full months of support left and afterwards the government will help to pay people’s wages, but it’s fair to everyone that businesses contribute as they get back to work.”

Sunak has said the furlough scheme will be in place until at least October. Companies are to be asked to “start sharing” the cost from the start of August, which could in effect force many employers to assess whether certain jobs remain viable.

This month the Financial Times quoted a business leader as saying: “If the furlough scheme is paying for jobs that don’t really exist, it’s better to release people into the job market to start looking for other work.”

The Treasury will reportedly direct employers to cover between 20% and 30% of an employee’s wage, and firms will also pay their national insurance contributions – approximately 5% of people’s wages.

The furlough scheme pays 80% of a worker’s salary up to £2,500 a month, and is supporting about 7.5m jobs, representing about a third of the private-sector workforce. The Office for Budget Responsibility has said the scheme could cost up to £80bn.

The Treasury was criticised this month after an anonymous official briefed that the nation was becoming “addicted” to the programme. The scheme is set to be closed to new applicants before the changes, to reduce the risk of fraud.

As of 12 May, HMRC had received 795 reports of potential concerns from the public suspecting employers could be abusing the scheme. Although these have not yet been corroborated, HMRC warned it would pursue criminal action in serious cases.

“It could be that you’re not being paid what you’re entitled to, they might be asking you to work while you’re on furlough, or they may have claimed for times when you were working,” a HMRC spokesperson said.

“We’re not trying to catch people out – if it turns out to be a genuine mistake then we’ll help put it right, and if it’s more serious then we’ll step in.”

Data released on Friday showed the total volume of retail sales dropped a record 18.1% in April as hundreds of thousands of businesses were forced to shut up shop to help tackle coronavirus.

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Recovery Hit as Argentina Exits Trade Talks, Opposition Says

Argentina’s decision to pull out of regional trade negotiations will exacerbate the country’s economic crisis, a coalition of opposition lawmakers said.

Citing economic policy priorities and the effects of the Covid-19 crisis, President Alberto Fernandez’s administration withdrew from ongoing and future talks with several countries as part of the regional South American trade bloc known as Mercosur, the group’s president pro tempore, Paraguay, said late Friday.

The government said in a statement Saturday that while it supports regional integration, global uncertainty and its own economic situation led it pull out of the negotiations. Argentina’s ambassador to the U.S., Jorge Arguello, said in a tweet that the decision was aimed at protecting Argentine companies and jobs. The move affects talks with South Korea, Singapore, Lebanon, Canada and India, among others, he said.

The move doesn’t affect Argentina’s participation in completed trade deals, including its agreement with the European Union.

The opposition Together for Change, the coalition of former Argentine President Mauricio Macri, said the move would close new markets at a time when the country most needs them.

“Our challenges cannot be overcome by closing our economy with nationalist models such as those that were put in place during the the 1929 debacle that devastated much of the world economy and led to the tragedy of World War II,” the coalition said in a statement on Saturday. “To get out of this crisis, Argentina needs more markets, not fewer.”

With much of the country under lockdown to curb the spread of the novel coronavirus, Argentina’s economy is forecast to contract by 5.7% this year, according to the International Monetary Fund. The government is negotiating with creditors in an attempt to restructure $65 billion in sovereign debt.

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