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UK government to pay up to 80% of wages for employees not working
- osrec 7y agoIt's bold move, but necessary to stop people going into work. The tubes here in London were still packed a few days ago, because low wage earners still need to travel in to earn and put food on the table.
- yev 7y agoI can't see how it touches low wage earners. In reality most of chippies & corner shops pay most with cash + minimal wage. For them - nothing changes. It does work pretty good though for city workers - managers, devs, etc
- BerislavLopac 7y agoHow does a significant reduction in wages count as "works pretty good"???
- tibbydudeza 7y agoIt is all funny fake made up money anyway ... there is enough resources for everybody.
- jpxw 7y agoUnfortunately this isn’t true. A massive amount of debt is going to be racked up in this time. The economic impacts are not immediate, but they will come.
- Ididntdothis 7y agoI wonder if the global debt levels will start the next wars. At some point one of the bigger countries will not be able or willing to serve its debt and who knows what will happen then?
- lotsofpulp 7y agoIf you can print money, you can always service the debt. The only problem is will the demand for your money keep up? That depends on what alternatives people have.
- gspr 7y agoIs it feasible to go to war with a country to collect on debts, though? If they're already having trouble paying, and the creditor is successful in its war, the debtor's economy will be so deep in shambles that repayment will be next to impossible.
- lotsofpulp 7y agoTheoretically, it’s less than the cost of letting everything fall apart for 2 months of pausing business.
- tibbydudeza 7y ago2 months seems optimistic ... SARS died out all by itself but I don't think this one will so a vaccine which is a few months off will be critical for folks to go back to "normal".
- AntonStratiev 7y agoVaccine estimate is 18 months according to the Imperial College: https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf https://www.imperial.ac.uk/media/imperial-college/medicine/s... Vaccines in human trials in the US now need to go through a 14 month observation period to understand effectiveness and side effects. Influenza vaccines, if they are any guide, are only 50-70% effective and need to be renewed annually. Ask people if they are willing to sacrifice 18 months of their life so that someone with an average age of 79 and existing health complications can live another couple of years and you will start to deal with the problem honestly. By my calculations for every 1 year of saved life (average age 79) we are paying for it with 10 years of lockdown life (average age 35-40).
- Mvandenbergh 7y agoDebt is just consuming now what we will produce later. That means that later we will have less. Luckily, the number which tells us how much it costs to shift production temporally: the real interest rate, is low. As a result, we can deal with the impact over the course of decades. As long as there is no crisis of confidence in the ability to repay that debt, it will not be an issue.
- UncleEntity 7y ago> Luckily, the number which tells us how much it costs to shift production temporally: the real interest rate, is low. That measure has been meaningless for a long time now since the central banks manipulate it for whatever goal they are currently trying to achieve. With the amount of uncertainty in the current economic climate if interest rates were set by the market they would be skyhigh as nobody would risk loaning money.
- ClumsyPilot 7y agoAnd that's where free market as an institution would get us all killed.
- globular-toast 7y agoThe government recognises that we can easily keep essential supplies going with only a fraction of the population working. Most people who are not working now were doing make-work jobs anyway. There's easily enough to go around. The government just has to do what it can to convince us we're not missing out to our neighbours.
- maximente 7y agounless you're an emerging market largely tied to financials through the US dollar. then you're looking at some serious trouble, especially if you're not food-independent.
- empath75 7y ago>there is enough resources for everybody. Not if the factories and stores are all closed for extended periods of time. It won't be long until we have shortages.
- gspr 7y agoThere's no reason the factories providing short-term necessities can't be kept open.
- empath75 7y agoThere's a lot more to life than necessities.
- ClumsyPilot 7y agoThe definition of a necessity is that you cant live without it.
- jpxw 7y agoThis is the biggest government intervention in the UK economy since WW2, by far. These are interesting times.
- Ididntdothis 7y agoThis makes more sense for me than sending $1000 checks to people who still have a job.
- schaefer 7y agoif you're referring to the US initiative, isn't it just an early tax "refund"? as in - no one's giving anyone anything. It's all just shell games.
- amf12 7y agoOr payroll tax reduction. While it might help some deserving people, it's also going to benefit people who don't need any help.
- Ididntdothis 7y agopayroll tax deduction also hurts social security and Medicare.
- SilasX 7y agoBecause it should penalize anyone who kept working or who was in an essential occupation?
- megablast 7y agoIt doesn’t penalise anyone. The money goes to those who need it.
- amf12 7y agoNo because the money will also be paid to middle class + people who still have jobs and who can WFH or have paid sick leave.
- Ididntdothis 7y agoThis is about helping people in need and not a gift from government.
- crucio 7y agoI do wonder if it would be easier and cheaper to bite the bullet and move to a universal basic income. This situation cold be going on for years.
- Ididntdothis 7y agoYou need a UBI on a level that allows people to live. That’s a lot of money. Better to extend unemployment benefits for a limited time.
- pjc50 7y agoThis is 80% of pre-existing wages! And, even though it's an employer subsidy, this is more beneficial in the long run if the economy recovers, because employers don't have to go through the fire/hire destruction and deadweight loss.
- deleted 7y ago[deleted]
- Ididntdothis 7y agoI will retire immediately if I can get a 80% UBI.
- dlkf 7y agoWhile I'm generally pretty receptive to the idea of a UBI, it is wholly incomprehensible implementing one would be "easier" or "cheaper" than directly addressing COVID-related wage loss. Additionally, something as pivotal as a UBI is exactly the kind of thing that you _wouldn't_ want to implement as a reaction to a temporary crisis. You're likely to create the wrong abstraction based on contingencies of the situation.
- bluedino 7y agoPeople have different incomes right now so that wouldn't work for anyone making more than the minimum
- deleted 7y ago
- pjc50 7y agoAnd people keep saying that basic income is impossible. This is an astonishing U-turn, and a very welcome one. I just hope the social distancing isn't too late.
- hacker_9 7y agoYou understand this only helps in the short term right? Yeah we'll live, we'll also be poorer than ever at the end of this, and someone's gonna have to pay back this debt.
- cm2187 7y agoAnd will be massively expensive, will be financed by borrowing. Can't in any way be used long term.
- matthewmacleod 7y agoYes, of course everybody understands that. Most also understand that the reason for being “poorer than ever at the end of this” will be because of the event itself and not the response to it, will understand that we will collectively have to “pay back this debt” and that either of these facts affect the suitability or otherwise of guaranteed income policies.
- user5994461 7y ago>>> the reason for being “poorer than ever at the end of this” will be because of the event itself and not the response to it I'd beg to differ on that. If the economy was left to crash, the cost of housing and rent could go down, which is the main expense for most households. What the cash injections are doing is holding these high at all costs, transferring money to those who already have assets. The non owner classes will be poorer than ever, facing ever unaffordable housing with extra taxes to cover the bailout debt. Instead of this. The government could decide that leases for the tax year 2020-2021 are getting their prices slashed 10% and there would be different consequences on the economy. It's all largely driven by human decisions. The virus has no say in that.
- 7y ago
- Jupe 7y agoSo, with all these people not working... when do our supplies start to run out? I mean, the stores are getting replenished now; but what happens when the supply chain dries up for a period of time? Will we be able to boot-strap the supply chain to keep the economies of the world rolling?
- danharaj 7y agoThe amount of labor necessary to keep people alive and infrastructure from crumbling is a small portion of all the work that is done.
- pjc50 7y ago(UK) Shelves are already very empty. Oddly this time the fresh stuff is still there and the non-perishable has gone. "Luxuries" are widely available, necessities aren't. There's a lot of seasonal stuff in cold storage - the apples you buy are from last year.
- globular-toast 7y agoWhy is it odd? Idiots can fill their lofts and garages with loo roll but there's only so much fresh produce that people can stockpile. Although I have no doubt that the same idiots are trying and most of it will go to waste.
- timthorn 7y agoThe smaller stores are fine. It's only really the supermarkets where there are stock issues.
- matthewmacleod 7y agoThere is no reason to expect that supplies will start to run out. The people who are not working are broadly not involved in the supply chain for essential goods.
- justsomedude11 7y agoI will happily pay 45% tax on my salary knowing the Gov has my back in difficult times like these. I'm fortunate enough to still have a job, but I'm happy I live in Europe.
- onetimemanytime 7y agoIn theory if you saved the difference in taxes...but then we don't generally save, but consume. max 2500 pounds. Say for 6 months? A Year? That's 15k to 30k. This is not enough to justify "45%" taxes for life...
- advisedwang 7y agoIt's not about breaking even financially. It's about knowing you're never going to end up homeless or starving when your luck turns bad.
- deepbreath 7y agoThere are plenty of homeless people in London.
- globular-toast 7y agoBeing homeless in Britain is essentially a choice. It might be surprising to you but people do actually make that choice.
- mattkrause 7y agoIt's not just consumption. You (or I) would need to save for worst-case scenarios and get very few economies of scale: you can't have 0.001 of an epidemiologist on retainer. The government can at least pool risk (and everything) over the entire country.
- calvinmorrison 7y agoI'd be shocked is most people on this page who are fully employed devs/techs/etc in the US do not already donate roughly 45% to the government. SS and Federal, plus state (3% for me, and almost 4% for local), now that's just on income, not anything you spend. Again, here we go. 9% sales tax in my municipality, plus individualized taxes on a variety of goods the government deems bad. This includes markups on booze, tobacco, sugary drinks, then we have car registrations, gas taxes, yearly renewal of misc fees like the license for our dog, drivers license ID renewals, then property tax, taxes on utilities like telecom, then we have run of the mill court things like speeding which are 45 tickets that balloon into 200 dollar ones when you add all the fees on top. Fees to file things you are required to file for. yes. I bet if we took a full accounting of the taxes we all actually pay in a lump sum, it's closer to 45%.
- arnaudsm 7y agoFirst remote work, now UBI: Covid-19 is planting the seeds that both are possible and can be beneficial to society in the future.
- tibbydudeza 7y agoMicrosoft Teams is okay but hopefully there will be better tools for this market.
- ClumsyPilot 7y agoIn the year 2020 a chat application takes 15 seconds to load old messages on an 8 core machine with a gigabit connection...
- AntonStratiev 7y agoHas anyone calculated the value of life that we are saving here? The Imperial College report had 510,000 dying in the UK under a no-action scenario. Average age lets say 79 as the virus progresses. 510,000 * (82.5-79) * GBP 30,000 (QALY for the NHS) = 53.5 billion pounds based on the funding methodology used for the NHS. Instead the Uk seems to be willing to throw its entire GDP at this problem, 3 trillion pounds. This seems... completely unjustified. How can we justify this sort of effort for Coronavirus, but not Climate Change, Obesity, Air Pollution, which will kill many more than COVID-19? Is it just because Coronavirus does it spectacularly in 3 months and all of those other things take decades?
- majc2 7y ago> This seems... completely unjustified. Um, no. Firstly, not everything is about rational economics. No sane and functioning democracy is going to allow 500k people to die if it can stop it.
- luckylion 7y agoWhat's the cut-off where it's okay? Like, you can stop all road traffic deaths, just stop driving. Sure, it might cost you a lot etc, but no sane and functioning democracy is going to allow x people to die if it can stop it, right?
- user5994461 7y agoSome of the tens of millions of people under 40 who will have to cover all that debt over the next decades might beg to differ.
- michaelmrose 7y agoYou are already covering debt for a lot stupider reasons at least you can console yourself that the money was worth spending.
- user5994461 7y ago
- jahaja 7y agoIt seems like there's two things where money is never an issue; war and the preservation of the status quo. This should be remembered when progressive reforms are rejected.
- PragmaticPulp 7y ago> It seems like there's two things where money is never an issue; war and the preservation of the status quo. Right. The government's policy should act counter-cyclically to counteract major issues like this. It's better to reserve our spending for when we need it than to spend indiscriminately when we don't. You want government monetary and fiscal policy to act as a counterbalance to natural instability, not as an amplification. > This should be remembered when progressive reforms are rejected. I agree, but for different reasons. It's important that we avoid overextending ourselves during the good times, because we need to keep our options open when we find ourselves in times like these.
- jahaja 7y ago> It's better to reserve our spending for when we need it than to spend indiscriminately when we don't. To save money in a large pile is not a proactive thing to do. It's reactive. The proactive thing is to have a far reaching social safety net and a stable social institutions.
- user5994461 7y agoThe cap is £2500 per month before or after taxes?
- globular-toast 7y agoThey said it was slightly above the median so must be before tax.
- hanoz 7y agoNotably this now leaves a gaping self employed person shaped hole in the otherwise impressively woven safety net.
- Svip 7y agoIf the UK is following Denmark here, that will be announced in 4-5 days. Here full time employees get 75%, part time 90%. Self-employed get 75%, while those particularly hard hit get 100% compensation on regular bills (in addition to the income compensation).
- e12e 7y agoOnly if you're not paying yourself a salary and social security taxes? At least in Norway that is very clear - if you're self-employed - you're usually much better off actually employing yourself.
- Mvandenbergh 7y agoYes but they have increased universal credit amounts substantially, that will go some way to close the gap.
- jlokier 7y ago> but they have increased universal credit amounts substantially, that will go some way to close the gap. I don't think that is true. They've increased UC by £20 a week. To our USA friends that is USD $23.30 a week. I don't think that counts as substantial. It is barely going to touch the gap. Almost nobody who was working last month self-employed is likely to be able to afford their rent and bills, or even just their family food bill, on UC going forward. While on UC, in theory you can also get your rent paid. But only if you are renting somewhere substantially below the median market rate for the area. Since the area is assessed over quite a large region, that means virtually everyone in a decent city has a rent level higher than is covered anywhere in the city, and people are normally required to move to the edges or beyond (or often into dodgy accomodation that would fail inspections). But people cannot move now. They can change their eating patterns, and refuse to pay bills (but watch out because debt collactors still have their jobs, and credit files are still recording). And full tenants can stop paying rent, and avoid eviction. But watch out because when protective measures stop, evictions will resume because people will not be able to pay the backlog of debt. Especially if the landlord sees it as an opportunity to refurbish and raise the rent (I've seen this happen, find an excuse to get rid of the current tenant then add a 25% rent hike in the ad for the next one). Worse than that: If evicted (eventually) due to substantial non-payment of rent, in normal times people struggle to find another landlord that will accept them aftwards, because landlords may contact a previous landlord for a reference. But tenants can't move to a cheaper home suddenly, especially not all at once, and with no money or drivers to move everything. (And lodgers, who are tenants living in someone's home with the landlord, are still not protected from eviction under current measures as far as I can tell. They are covered by different rules than tenancies, have few rights, are highly vulnerable if the landlord wants them gone. Notice can be as little as 1 week. There are a lot of lodgers in the UK.) If there was rent deferral of some kind that would help. (Ideally where the government pays the rent so the landlord does not know the state of the tenants finances.) But the government has, currently, said no to direct help for renters. They have tweaked the housing allowance, but only by a small amount so it still doesn't cover the rent for the majority of people in suddenly changed circumstances. And even with all benefits added up, it's still much less than the 80% that most salaried people are getting. Self-employed are looking awfully screwed at the moment. And people who got made redundant just recently are also getting a rough deal, unless they are lucky to have an employer who undoes the redundancy somehow. Those people are unlikely to be able to get a personal loan to cover their shortfalls either. Many with already bad credit rating will get "computer says no", but those with good credit have a problem too: After passing the rating, they will be asked for proof of income, because it's the law in the UK since a few years ago that lenders must get that proof. Which people suddenly without jobs cannot provide.
- am_lu 7y agoAnyone listened properly to the speech? First they were talking about "grants" then started mentioning interest and how nice they are not to charge it for a year, then started talking about LOANS, presumably to be paid back.
- timthorn 7y agoThere are several support elements available to businesses. There has previously been the announcement of interest free loans, and grants to small businesses. Today they announced that the government will pay 80% of furloughed workers' salaries, up to £2500 per month. That does not need to be repaid. They also announced today that the interest free period on the loans will be extended to 12 months, up from 6, which is separate to the salary intervention.
- ksec 7y agoCould someone correct me if I am wrong. UK is going to print lots of GBP to fund this, and in doing so, it will devalue its currency, since EU will possibly be doing much of the same, the Euro and GBP will devalue against US ( and everyone else ), assuming US on a relative terms did not print as much ? Or is this assumption wrong?
- HatchedLake721 7y agoWhy print? Borrow
- calcifer 7y agoIndeed. Borrowing has never been cheaper.