The state should pay up to 90% of the monthly wages of people most at risk of losing their jobs due to coronavirus, Labour has said.
The party said wage subsidies were urgently needed to mitigate the economic impact of this “unprecedented human crisis”.
It wants direct payments to those temporarily out of work and those in firms facing a sharp drop in revenue.
The government will announce its own plans to support workers later.
MPs from across the political spectrum, including many Conservatives, have appealed to Chancellor Rishi Sunak to take swift and potentially unprecedented action to protect jobs and incomes.
Mr Sunak announced a multi-billion pound package of support for business earlier this week but Labour said “gaping holes” remained in assistance to workers whose livelihoods were under threat from the pandemic.
Labour says the government should intervene to underwrite the wages of employees most at risk of redundancy, with the lowest-earners being paid 90% of their monthly salaries by the state directly through the tax and benefits system, based on a system in place in Denmark.
Under Labour’s plan, middle-earners in at-risk firms would receive 85% of their monthly salary from the state and higher earners 80%, with the remainder being topped-up by employers.
Anyone working for a company which faces having to lay off a minimum of 30 staff, or one in five of their workforce, would be eligible.
Employed and self-employed workers who can show their revenues will be 30% lower than in the same month last year should also qualify for support.
The plan would also cover those temporarily out of work – such as teachers, those having to care for dependants with special needs and those placed on unpaid leave.
Labour’s Shadow Chancellor John McDonnell said the UK had lagged behind other countries, such as Denmark, New Zealand and Austria, in terms of the speed of its response to the economic challenge posed by the pandemic.
Labour’s plan, he insisted, was “practical and deliverable” and should be underpinned by obligations on firms in receipt of government-backed loans not to lay off staff.
‘Time running out’
“The proposals provide the economic support needed for people to be able to make choices that protect their own health and the health of others,” he said.
“They are a plan for securing wages, welfare and wellbeing.”
Labour is also calling for other major changes to the benefit system, including:
- An immediate increase in statutory sick pay to 90% of average earnings or living wage levels
- Guaranteed sick pay for part-time workers and those on zero hours contracts
- Equivalent compensation for the self-employed
- Universal Credit advances to be in the form of non-repayable loans
- Increases in other benefits, such as Jobseeker’s Allowance and Carer’s Allowance
The TUC has said that “time is running out” for those in low-margin businesses. Alongside wage subsidies, the trade union body says the state must step in to protect staff whose companies cease trading and to write off company debt.
The government says it has consulted trade unions and employers on its response. Prime Minister Boris Johnson has said nothing can be ruled out and that it would consider all options, including some form of universal basic income.
France has guaranteed that no business will go bankrupt as a result of the pandemic while the US is preparing to send all its citizens cheques, potentially worth more than $1,000.