Nicola Sturgeon has said it makes no sense for the UK Government to end its furlough scheme next month.
She has also made clear it will not be “acceptable” for the initiative to stop without Scotland being given the ability to set up an alternative.
The First Minister told the UK Government ending the scheme – set up by Chancellor Rishi Sunak at the height of the coronavirus pandemic – will “narrow the options available to us in controlling the spread of the virus in the next few months”.
By the end of June, some 736,500 workers across Scotland had been furloughed.
Ms Sturgeon made her plea as Scottish Labour warned almost 350,000 workers in Scotland could be facing redundancy when the job retention scheme closes at the end of October.
Labour said “national trends” indicate as many as 346,000 Scottish workers were still on furlough in mid-August and could be at risk of losing their jobs when the scheme ends.
Calling for an extension, Scottish Labour leader Richard Leonard said: “Almost 350,000 workers are facing a furlough cliff-edge next month – and this could lead to long-term unemployment on a scale the people of Scotland have not seen in their lifetimes.”
Ms Sturgeon meanwhile insisted there was still an “ongoing need for exceptional support for businesses during what are, after all, exceptional times”.
She added: “The bottom line here, unfortunately, is this pandemic will not end next month, so it stands to reason the economic impact of the pandemic will not end next month either, so we continue to urge the UK Government to maintain support for jobs and employment for as long as that is needed.”
Speaking at her coronavirus briefing she added: “We can’t withdraw support from businesses when we are still dealing with he implications of Covid, and we can’t and we shouldn’t limit our ability to practically and strategically do what needs to be done to tackle the virus – that to me just makes no sense.”
She said she hoped the UK Government were not “simply going to stand back and watch the potential tsunami of redundancies that are avoidable if we take sensible decisions”.
Ms Sturgeon said if the scheme does end next month – as the Chancellor has previously insisted it will – the Scottish Government needs more borrowing powers so it can set up an alternative.
She said: “The UK Government is borrowing money to fund it, rightly so in my view, and they decide to cut it off. I don’t then have the ability to borrow that money for Scotland to continue it for Scotland.”
Without these powers a Scotland-only furlough scheme could lead to cuts to health or education spending, Ms Sturgeon added.
“If the UK Government doesn’t want to extend to furlough, then my appeal to it would be give extra powers to the Scottish Government so that I can then make the choice of having a Scottish scheme.
“What is not in my view acceptable is to leave us with no options around this.”