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Maternity bills should be shared, says report.

Byline: Chris Kelsey

SMALL businesses should be able to club together to share the cost of maternity pay, a think tank report recommends today.

The report by the IPPR also says the Government should take on more of the risk when a small firm hires someone who has been on long-term sickness absence.

New rules which came into force at the start of this month will increase the costs on small businesses if a proportion of their staff go off sick.

But the IPPR says the old system should be restored so that the Government covers more than 90% of statutory sick pay (SSP) costs incurred by small firms for those moving off Employment Support Allowance (ESA).

The report suggests that the costs for small firms of taking on workers with disabilities and long-term health conditions would be substantially reduced, as well as the perceived risk of hiring individuals from ESA.

The report recommends a Danishstyle insurance scheme to allow small businesses to share the cost of occupational maternity pay.

The Danish scheme works by increasing the level of maternity benefits received by employees, but pooling the additional financial risk between all businesses.

A recent study commissioned by the DWP found that only 11% of employees in small firms received occupational maternity pay compared to 21% in medium-sized firms and 47% in large businesses.

The report shows that in recent years SMEs and self-employment accounted for more than 80% of jobs growth and have played a disproportionate role in supporting individuals from worklessness into employment and have a greater share of disabled, younger and older workers and those with low levels of educational attainment.

But the report shows the Government does little to incentivise or offer support to small firms in hiring individuals claiming ESA or to move to A occupational benefits.

FSB Welsh Policy Unit chair Janet Jones said: "We hear a lot about how small businesses are the engine of the economy and this research con-firms this. Micro and small businesses have by far and away been the biggest job creators since the recession.

"Because of their innate flexibility, they also lead the way in providing a route back into work for the unemployed, with nine in 10 unemployed people either finding work in a small firm or starting their own firm.

"This report also shows the world of work is changing with self-employment, part-time and temporary work growing since the recession.

"This not only highlights the flexibility and dynamism of the private sector, but the pressures facing employers when it comes to hiring and retaining staff.

"IPPR recommend a number of important and interesting policy ideas that will support small firms deliver full employment and address the costs and risks faced when taking on staff.

"One particularly interesting idea is devising collective insurance schemes akin to the Danish maternity pay model, which would help more small businesses offer occupational benefits to their staff and place them on a better footing when it comes to attracting talent."

She added that the FSB would be "looking to work with Government and the insurance industry to explore the feasibility of introducing such a scheme in the UK".

Spencer Thompson, economic analyst at IPPR, said: "If Britain is to get to the vision of full employment recently set out by Chancellor George Osborne, the Government needs to do more to help small firms hire people who are suffering from structural unemployment and economic inactivity.

"While a return to growth might help Britain tackle cyclical unemployment, people with structural barriers to work are more likely to be hired by small firms if the Government covers more of the risk of further short spells of sickness."

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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Apr 18, 2014
Words:616
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