March 25, 2020 / 12:10 AM / 14 days ago

UK should widen coronavirus wage guarantee to self-employed - think tank

FILE PHOTO: Workers walk to work during the morning rush hour in the financial district of Canary Wharf in London, Britain, January 26, 2017. REUTERS/Eddie Keogh

LONDON (Reuters) - Britain should widen a government wage guarantee to cover self-employed and sacked workers, rather than just those whose employers agree to temporarily put them on leave, a think tank said on Wednesday.

Last week Britain’s government promised to pay 80% of companies’ wage bills for staff who they put on leave due to the coronavirus shutdown, rather than sacking them, similar to an earlier proposal from the Resolution Foundation think tank.

Chancellor of the Exchequer Rishi Sunak told parliament on Tuesday that he was looking into how best to support the self-employed, but there were “very significant challenges” in identifying which among them would lose income.

The Resolution Foundation said the best approach would be to ask the self-employed to declare their average income over the past three years, and how much their earnings had fallen. Tax authorities could later check for fraud.

The pay guarantee for employed workers covers earnings up to 2,500 pounds a month, roughly the average full-time wage. The Resolution Foundation said a lower cap might be more appropriate for the self-employed who on average earn less.

“This would also reduce the incentive for self-employed people to discontinue economic activity that could be continued with,” the think tank said.

Based on the average earnings of self-employed workers in Britain, this would cost 3.6 billion pounds for three months if a million people claimed it, it estimated.

Employees whose hours are cut should also be covered, as should staff who are sacked after their employers refuse to participate in the government scheme.

Reporting by David Milliken

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