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Action required to enable firms to retain staff

More needs to be done by the government to help smaller employers hold on to their staff during the recession.

The Forum of Private Business (FPB) said that a new £2,500 subsidy for firms that take on and train people who have been unemployed for six months is not enough in itself and that initiatives are required to help prevent further job losses.

As well as the subsidy, the FPB wants the government to provide help for employers who are struggling to retain their existing staff.

Changing the way the Working Tax Credit scheme operates in order to support shorter working hours and freezing planned increases in employment costs would allow businesses to limit the redundancies they may be forced to make, the FPB argued.

Phil Orford, the FPB’s chief executive, welcomed moves to get the long-term unemployed back into work but he also called for a more sustained programme in the forthcoming Budget to protect employment.

Mr Orford commented: “It is important to remember that recruitment is still taking place, and for these employers this scheme is very welcome, but many small businesses are concentrating on trying to keep hold of their skilled employees. This should also form a central pillar of the government’s support strategy.”

He went on to say: “The administrative structures are already in place to modify Working Tax Credits to allow for the retention of key and skilled staff on shorter working hours.

“This process should be based upon the actual hours worked, with income validated by the employer, rather than the current scheme’s method of basing calculations on the previous year’s earnings.”

The FPB, however, warned that measures designed to protect jobs and boost recruitment should not become actual barriers to employment.

The business group is opposed to the proposed Statutory Redundancy Pay (Amendment) Bill, which would increase maximum redundancy payments from £350 to £500 per week.

It also called on the government to freeze the national minimum wage at its current rates and to scrap the 0.5 per cent increase in employers’ National Insurance Contributions planned for 2011.