Britain's leading business organisation has unveiled a series of labour market reforms, including an alternative-to-redundancy scheme, that it believes could prevent the economy from surging towards unemployment of more than three million.
The Confederation of British Industry (CBI) has also warned that levels of employment regulation are at a "tipping point" and have added a jaw-dropping £70bn to business costs since 1998 – equivalent to employing 215,090 people in full-time jobs on average pay over the period.
While business leaders believe the worst of the recession is over, the CBI said companies face a long convalescence and the dole queue is expected to peak at 3.03 million in 2010.
The most radical of the CBI's demands is for the Government to implement an Alternative to Redundancy (ATR) scheme "as soon as possible", which would give organisations the option to use the existing redundancy regulations or to place an employee on ATR for a set period of six months. The scheme would help companies retain skills during a short and sharp fall in demand and provide workers with more security and hope of returning to work, according to the CBI's Jobs for the Future report, sponsored by Siemens, published today.
John Cridland, the CBI deputy director general, said: "The ATR 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."
While an employee would not work during the six months, they would be paid the ATR allowance equal to twice the rate of jobseeker's allowance, half paid by the Government and half by the employer. An employee on an ATR could also continue to look for a new job.
"Business 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," said Mr Cridland.