Salmond urged to subsidise salaries as threat of more job losses looms

Published on Saturday 30 May 2009 14:29

THE Scottish Government is under pressure to subsidise the salaries of private sector employees who face losing their jobs due to temporary cash flow problems.

The Federation of Small Businesses in Scotland and the STUC are pressing Alex Salmond's administration to introduce short-term wage subsidies based on a 48m package announced by the Welsh Assembly Government last year.

They say thousands of Scottish jobs could be saved if firms were offered up to 2,000 per employee to tide them over until credit conditions improve. The lobby groups claim many viable businesses are having to lay off staff because of temporary cash flow problems, caused by customers falling behind with payments or going bust.

They fear that if the Scottish Government does not take urgent action, thousands more skilled jobs will be lost and many companies will not be able to take advantage of the recovery when it comes.

The UK Government has so far refused to provide wage subsidies despite the introduction of schemes in other European countries such as France, Germany and the Netherlands.

But the FSB and the STUC hope subsidies can be provided at a devolved level after the Welsh Assembly Government, which has far fewer powers than Holyrood, announced a 48m scheme last November.

STUC general secretary Grahame Smith said: "In Scotland we are only too aware of the long-term costs associated with failing to react to rising unemployment. Investment now through a wage and training subsidy initiative will help both cushion the human cost of recession and upskill the economy for the challenges ahead."

Stuart Mackinnon of the FSB said: "The Welsh Assembly has done it and it doesn't have a primary legislatorial function. There's no constitutional reason why the Scottish Government couldn't press ahead."

In Wales, companies which have already cut employees' hours to save costs but which are still facing financial difficulties can qualify for a wage subsidy of 2,000 per worker plus 2,000 towards training.

A spokeswoman for the Scottish Government said it was looking into the matter.

She said: "We are assessing whether or not wage subsidies would be relevant to economic recovery in Scotland. Through meetings between the Cabinet and our partners, including business and the STUC, we are working collectively to take the action we need to support the recovery."

The FSB and STUC's calls come just days after Scotland lost a further 710 manufacturing jobs when electronics giant Hewlett-Packard decided to shift manufacturing from its factory in Erskine, Renfrewshire to the Czech Republic.

Unemployment in Scotland rose by more than 20,000 in the first three months of the year – the equivalent of 220 jobs a day.