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CBI suggests an 'alternative to redundancy' scheme to save jobs

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The Confederation of British Industry (CBI) has launched advice for employers on how to stem the tide of redundancies.

The report from the CBI and Siemens claims, in order for the country to remain competitive in attracting global talent, business must improve skills levels and assess the impact of costly employment laws on future job creation.

The CBI, which estimates unemployment will rise to 3.03 million by the second quarter of 2010, has called on the Government to implement an ‘alternative to redundancy' scheme as soon as possible. This would mean as an alternative to the existing redundancy path, affected employees would be paid an allowance for six months equal to twice the rate of jobseekers allowance - half funded by the employer and half funded by the Government.

This would mean after the six-month period, or when the economic situation improves, the employer could re-employ the staff member, saving them from redundancy.

The scheme would only be implemented after a consultation process and would help prevent job losses, giving employees greater security, the CBI claims.

The report also recommends the length of time for consultations should be revised, the 2011 hike in national insurance contributions should be deferred and all future employment legislation should be scrutinised to find out how far it will work to help create jobs.

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

"We consider 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."