Employer groups and unions have called on the government to provide support for more than half a million workers facing redundancy or reduced hours.
At the government’s Regional Economic Council, the TUC and the Federation of Small Businesses (FSB) demanded wage and training subsidies for up to 600,000 workers annually whose companies move to short-term wages and temporary lay-offs.
The government should pay 60% of wages and all National Insurance contributions during the lay-off or reduction in hours, regardless of the employer’s ability to make additional contributions, in order to help hard-hit businesses during the recession they added.
Brendan Barber, general secretary of the TUC, said wage subsidy schemes had already been successfully implemented across Europe.
“Temporary lay-offs and short-time working agreements are a last resort for employers, but where they are needed, wage subsidy schemes provide a quick and effective way to cut costs for struggling businesses and vital financial help for hard-pressed employees,” he said.
John Wright, national chairman of the Federation of Small Businesses, added: “This scheme would begin to alleviate the cash flow crisis that is engulfing many small businesses and will enable them to join in a recovery when it comes, so should be regarded as a national investment which will eventually pay for itself.”
The total cost would amount to £3.3bn per year, although this would shrink by two-thirds with increased tax income and reduced employment benefits, the groups claim.