Pressure for German-style short time working schemes

Rotherham-based Gordon Millward, the regional chairman of the Federation of Small Businesses (FSB) , said the Government must “wake up” and announce steps in its Autumn Statement to help create jobs for young people.

Peter Spencer, the professor of economics and finance at York University, said the UK should consider adopting German-style short time working schemes.

Mr Millward said: “The FSB has long argued for a National Insurance contributions cut for micro businesses as a way of creating jobs. A measure the Government could adopt would be to cut National Insurance contributions for those aged between 16 and 24 taken on in a new job in a micro (small) business. This measure would target tax cuts where they are most needed, and halt rising youth unemployment.”

Mr Spencer, who is economic adviser to the Ernst & Young Item Club, highlighted the fact that the German labour market was “particularly effective” in preserving jobs through short time working.

He added: “This type of flexibility is built into the system through the routine use of working time accounts and in most industries there are plant-level arrangements for negotiating short time working in a downturn.

“These arrangements are supported by the social security system, which cushions the effect on take home pay. Government support for short-term working was extended as part of a package of measures designed to support the labour market during the last recession. Unemployment hardly increased at all in Germany during the crisis despite the huge fall in exports and output.

“The UK labour market seems to be evolving along similar lines.”