Wage subsidies can help prevent mass redundancies, retaining essential skills and the TUC and FSB believe this will help business save costs and give them a better chance of surviving the downturn. It is estimated the package would cost the Government £1.2 billion each year.
Wage subsidies are already available in European countries including France, Germany, Italy, Spain and Wales.
The TUC and FSB have also called for the suspension of a benefit rule that forces workers who are on reduced hours or have been temporarily laid-off, to give up their existing jobs and be available for new work in order to claim benefits after 13 weeks. This is because temporary lay-offs and short-term working agreements often last longer than 13 weeks and the TUC and FSB are concerned staff will not have to give up real jobs to search for new ones that do not exist.
TUC general secretary Brendan Barber said: "UK unemployement is spiraling fast and we are now losing jobs twice as fast as the rest of Europe. The Government must act quickly and introduce a wage subsidy scheme for businesses to help stem the flow of job losses.
"Wage subsidy schemes are already working well across Europe and are preventing many thousands of unnecessary job losses. The government must provide support for UK businesses and workers too."
