Industry reacts to CBI's 'alternative to redundancy' idea

Printers have reacted with caution to the CBI's proposal for an Alternative to Redundancy (ATR) scheme that would enable employers to temporarily suspend staff in anticipation of the upturn.

The proposal, which came as the industry body warned that unemployment could rise to more than 3m in the second quarter of 2010, is intended to reduce job losses during the recession.

Under the scheme, employees would be sent home on an ATR agreement on pay of double the rate of the Job Seekers' Allowance for a period of up to six months, with both the government and the employer paying the standard rate.

After the period of ATR, the employer could either take the employee back or make that person's role redundant. An ATR scheme would only be implemented following consultation, as in a redundancy.

The CBI claimed that the scheme would help companies retain skills during a "short and sharp" fall in demand and give workers greater security when returning to work. 

CBI deputy director general John Cridland said: "We considered various forms of wage subsidy and support for short-time working, but this approach is better.

"Businesses 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."

However, Chris Walton, chief operations officer at DST Output, warned that the scheme did not address the real problem. He said: "Losing staff should only ever be a last resort and most companies would agree that anything that can be done to avoid losses will be looked upon favourably.

"However, this initiative could be seen as a short-term solution to a long-term problem. Organisations should strive for a sustainable business model at the same time as identifying efficiencies in every detail of their business."

Meanwhile, Unite warned against the ATR scheme, which it claimed could mean that workers lose their right to redundancy pay.

Assistant general secretary Tony Burke said: "We are very sceptical. It is better to keep people in training rather than sitting at home. We are campaigning for short-time working subsidies similar to those in France and Germany."

Unite is one of a number of organisations that has called for a short-time working subsidy. Earlier this year the Federation of Small Businesses teamed up with the TUC to lobby the government.

In Wales, companies can already receive a subsidy of £2,000 for training, under new legislation introduced at the start of the year.

Bloggers on printweek.com also met the news with scepticism. One wrote: "I think the proposal is interesting, but is unlikely to find acceptance. However, it could work in reverse, for example if a company qualifies it could ask for a wage subsidy from the government equivalent to the jobseekers allowance."

Another said: "The principle will be abused. The employees appear to be the losers and left in limbo. What happens if the company collapses during that six-month ATR period? It looks to me like the system is wide open to abuse."

ATR is one of a series of initiative proposed by the CBI, including a review of the length of consultation on redundancies and a delay in the increase in National Insurance contributions scheduled for 2011.

The employers' body said that reduced rights to consultation would reduce uncertainty for staff and stop delays for companies "trying to adapt rapidly to changing circumstances".

Burke hit out at the proposal to review the consultation process, calling the argument that staff uncertainty will be reduced "absolute nonsense".

"The consultation period provides for opportunities to save jobs and look at other options. We fought hard to get the 90-day consultation and there are often agreements when staff go within that period," he said.