Page last updated at 07:06 GMT, Monday, 6 July 2009 08:06 UK

CBI urges job suspension scheme

Queue outside job centre
The CBI believes unemployment will top three million next year

Business leaders have called for the government to do more to stem rising job losses, including introducing an "alternative to redundancy" scheme.

The CBI wants struggling firms to be allowed to suspend employees' contracts for up to six months.

Workers would then be paid the equivalent of twice the rate of Jobseekers' Allowance - half paid by the government, half by the employer.

But the TUC questioned whether employees would lose redundancy rights.

Unemployment in the UK reached 2.22 million in the first quarter of 2009.

The CBI warned that unemployment will rise to 3.03 million by the second quarter of next year unless more is done to help save jobs and businesses.

Union concerns

Under the group's proposed scheme, firms could take employees back during the six months if business improves. But if demand is still low, workers would be offered the normal redundancy package.

"The alternative to redundancy scheme could save jobs by giving businesses more leeway as the economy recovers," said John Cridland, the CBI's deputy director general.

"This is not about businesses ducking their redundancy responsibility - in fact, if a scheme runs for six months and a redundancy is still made, then the business will end up paying more."

But TUC general secretary Brendan Barber said: "We have many concerns about the detail of these proposals.

"In particular, there will be worries about whether employees who took up this option could end up losing redundancy rights and the big cut in income they will face, without any cushioning redundancy pay for the first six months."

Separately, a report by the accountants BDO Stoy Hayward says the economy is looking like a "saxophone-shaped cycle of recession and recovery".

The group says there was a sharp downturn from July 2008 to February 2009, followed by a bounce starting in March, and now predicts a period of slowing recovery.

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