WARNING: The government must help SME's retain and recruit
In addition to a new £2,500* subsidy for taking on and training workers unemployed for at least six months, the FPB believes the Government should provide help to businesses struggling to retain their existing staff. Modifying the Working Tax Credit scheme to support shorter working hours and freezing planned increases in employment costs would allow businesses to limit the redundancies they are forced to make.
While the FPB’s Chief Executive, Phil Orford, welcomed the measures to get the long-term unemployed back into work, and boost their skills to help businesses and the economy to grow, he called for a more sustained programme in the forthcoming Budget, to be announced on 22 April 2009, to better protect employment.
“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,” said Mr Orford.“It is important to remember that recruitment is still taking place”
“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,” he continued. “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.”
He added: “Further, in protecting jobs and boosting recruitment, the Government must ensure that its initiatives, including those designed to benefit employees, do not in themselves become new barriers to employment.”
The FPB is against the proposed Statutory Redundancy Pay (Amendment) Bill, which would increase maximum redundancy payments from £350 to £500 per week. The additional costs would force many more businesses to close rather than attempt to reverse their fortunes, adding to unemployment and leaving the taxpayer to foot the bill.
In addition, last week (1 April 2009) was the 10th anniversary of the introduction of the National Minimum Wage (NMW). Although it has benefitted workers, the NMW has increased by 60% over the past decade, becoming a significant cost burden for smaller business employers. In its submission to the 2009 Budget, the FPB called for it to be frozen to reflect the reality of wage stagnation and to protect jobs.
The FPB is also concerned about the impact of future increases in the cost of employment. In November 2008’s Pre-Budget Report, for example, the Government announced that employers’ National Insurance (NI) Contributions will increase by 0.5% from 2011. The FPB believes this will amount to a tax on both new and existing jobs at a time of fragile economic recovery, and is calling for the increase to be scrapped.
*The subsidy consists of an initial £1,000, with an additional sum of up to £1,500 worth of ‘on the job’ training.