The government is being urged to set up a wage subsidy scheme in order to help hard-pressed employers.
The Federation of Small Businesses (FSB) and the TUC have put forward a £1.2 billion plan that would help fund firms that are moving to short-term wages and temporary lay-offs. Wage subsidies are operating throughout Europe, and the FSB and TUC believe that the scheme could prevent mass redundancies and the loss of essential skills, as well as help viable companies survive the downturn and ensure they are well placed to compete and grow once their financial situation improves.
John Wright, the FSB’s national chairman, said: "The government must address the threat of unemployment by putting in place the principles the TUC and FSB are proposing to retain jobs and keep the economy moving. We must follow the lead of other European countries and give viable small businesses the support they need to keep people in jobs and pull the country out of recession."
Mr Wright 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."
