CBI floats alternative to redundancy that 'could save jobs'

Published on Sunday 5 July 2009 22:12

BUSINESS leaders today urged the government to do more to help stem the tide of job losses, including a scheme aimed at providing an alternative to redundancy.

The CBI warned that unemployment will rise to 3.03 million by next summer unless action was taken now to save jobs and businesses.

The group complained that levels of employment regulation had reached a "tipping point", having added 70 billion to business costs since 1998.

An "alternative to redundancy" scheme should be adopted by the government, under which workers would be paid an allowance twice the rate of Jobseeker's Allowance for six months if they were laid off, financed jointly by government and employers, said the CBI. Ministers were also urged to review the current 90-day consultation where 100 or more employees face redundancy because it "prolonged uncertainty" for staff.

The CBI report, published with engineering firm Siemens, voiced concern about the rise in unemployment among young people, especially 16 to 18-year-olds not in education, employment or training.

John Cridland, deputy director general of the CBI, said: "The worst of the recession may be over, but businesses still face a long convalescence and dole queues will continue to grow. The alternative to redundancy scheme could save jobs by giving businesses more leeway as the economy recovers.

"We considered various forms of wage subsidy and support for short-time working, but this approach is better. Businesses will be more able to cope with sharp drops in demand and prepare for recovery, while workers benefit from improved financial support and a door that is kept open for six months.

"This is not about businesses ducking their responsibility – in fact, if a scheme runs for six months and a redundancy is still made then the business will end up paying more.

"Businesses also feel that the sheer volume of workplace legislation has reached a tipping point. The costs of new regulations are almost equal to a quarter of a million jobs.

"While we do not want to see laws unpicked, we do urge the government to think differently about future laws and their impact. Rules must pass the sustainable jobs test."

TUC general secretary Brendan Barber said: "It is welcome that the CBI has at last recognised the need to support employers to retain viable jobs during the downturn, but this inflexible and under-funded scheme is not fit for purpose. It would deny businesses the support they need to vary hours and working patterns during a recession while leaving workers on poverty wages."