US economy

How the UK furlough scheme compares with other countries


The chancellor, Rishi Sunak, has announced that the UK’s job retention scheme – under which the state now pays 80% of the wages (up to a £2,500 per month maximum) of one in four UK workers – is to be extended until the end of October.

Sunak also said that employers would be asked to contribute towards the £14bn a month cost of the scheme, and that it would soon allow part-time work to help businesses reboot their trade.

So how does the UK scheme compare with schemes in other countries?

How much has it cost? Berlin expected it to cost more than €10bn (£8.8bn) at its relaunch in March, though it is likely to escalate. Estimates have since hit €40bn, but could go higher even though the lockdown is easing.

How many workers does it cover? More than 10m employees.

What does it pay? It is among the most generous, paying up to 67% of net wages lost due to shorter hours, to a maximum of €6,700 per month for employees with children, and 60% for those without children. Unlike the British scheme, which forces firms to send workers home and not work, German firms can allow staff to work part-time, reducing the cost.

Will it need to be reformed? No. Short-time work allowance has been a long-standing policy in Germany, compensating workers for taking a cut in hours. It was used extensively during the recession that followed the 2008 banking crash .

How much has it cost? About €26bn so far this year.

How many workers affected? So far 12.2m

What does it pay? 70% of the gross salary (or about 84% of the net salary) for salaries up to €6,927 gross per month. Employees on minimum wage (SMIC) receive 100% compensation. As with the German scheme, firms can claim just a part of a worker’s salary and so many do, limiting the cost to the finance ministry.

Will it need to be reformed? No. It is already flexible, allowing firms to use workers part-time.

How much does it cost? It is part of €3.7bn package of subsidies paid to workers

How many workers affected? Around 450,000 workers have claimed Covid-19 related compensation .

What does it pay? Until 4 May, employees receive up to 70% of their net income up to a maximum €21,400. Since 4 May the scheme has become more generous, paying an 85% subsidy up to €21,400.

Will it need to be reformed? The Irish government has already signalled to employers that the scheme, which like the British scheme forces claimants to stay at home and not work, will be modified to allow for part-time worker subsidies.

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US – Federal pandemic unemployment compensation program (FPUC)

How many workers affected? The FPUC is now supporting more than 30m US workers.

How much does it cost? It is part of the US Congress $2.2tn Covid rescue program.

What does it pay? The Coronavirus Aid, Relief, and Economic Security (CARES) Act has two payment elements. Firstly, it expands states’ ability to provide unemployment benefits, including for workers who are not ordinarily eligible, providing an additional $600 per week until 31 July.

Secondly, one-off cheques of $1,200 have also been sent by the government to all individual households who earn less than $75,000 a year. Couples who earn less than $150,000 have received $2,400, plus $500 for every child in their care. A reduced amount, on a sliding scale, was paid up to earnings of $99,000 for individuals and $198,000 for couples.

Will it need to be reformed? There is pressure to find a way to pay firms that hire back workers on part time contracts, but is it unclear how that would work. Larry Kudlow, the director of the White House National Economic Council, said a fresh stimulus package would be considered at the end of May and early June.



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