New proposals made by business leaders today would see workers put into a low-paid “limbo”, instead of being made redundant.

The CBI has called for radical action to help buinsesses survive the financial downturn. The Alternative to Redundancy (ATR) scheme would see workers receive around £130 per week. This would be paid for equally by the Government and the employer. The worker would remain at home for six months and be called back to work when economic conditions pick up.

John Cridland, the CBI’s deputy director-general, said: “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.”

The employers’’ organisation also called for other steps, including delaying the increase in national insurance payments that are scheduled for 2011. The organisation claim that this will help to minimise the recession’s effect on the job market. The plan will also affect small business insurance policies.

The ATR plan would allow employers to make workers on the scheme redundant with only four weeks’ notice. Unions have already protested the scheme. Workers on teh ATR who accept another job offer would also be denied any redundancy package.

Brendan Barber, general secretary of the TUC, said: “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.
“It is also better to keep people in work and training with their employer, even if on short-term working, rather than sitting at home, which is why unions and other employer groups are campaigning for the kind of wage subsidies that are now common in the rest of Europe.”

Workers aged over 25 on the ATR would receive at least £128.60 a week, with the Government paying £64.30 — equal to the jobseeker’s allowance — and employers paying the same, or more if they wished. Those under 25 would receive less because jobseeker’s allowance for under-25s is £50.95.

Unemployment, which has risen to 2.26 million, is expected to surge to more than three million between July and September next year. About 444,000 workers were made redundant in the three months to April alone.