Government considers possibility of Mini Jobs in the UK

In a bid to boost employment opportunities in the UK, Conservative MPs are keen to promote the creation of "mini-jobs". Designed around a German scheme which was introduced about 10 years ago, taking on "mini-jobs" allows employees to take on work of up to around 400 euros per month, without having to pay tax or national insurance. Ideal for people who would like to work flexibly, the mini-job holder does not have to give up any of their salary earnings when the amount is less than this tax-free limit. Meanwhile, employers avoid any complications by paying a simple to administer flat rate which covers employee pensions, and other salary-related taxes.

An employee can take on several mini-jobs up to this monthly income limit, with no impact on their income apart from a potential loss of their unemployment benefit if they reach a certain income threshold. While the rest of Europe is suffering with the recession, Germany has one of the lowest unemployment rates at only 6.8%, and some believe that this initiative has had an important role to play in their success. Others argue that the reason for Germany's success in creating jobs is down to the weakness of the euro, which has increased Germany's exports.

Critics of the model argue that some workers are now being forced to remain in low paying or precarious jobs (as there is no national minimum wage in Germany) and have few opportunities to further their careers, especially in the hospitality and catering sectors. Others suggest that full time positions are being divided up into many mini-jobs, which reduces income from taxes.

Dr Ben Reid, from the Centre for Workforce Effectiveness, believes the effectiveness of the scheme will be minimal in the UK, as it does not solve the root causes of unemployment, especially regarding young people. Currently UK workers can earn an annual personal allowance of £8105 before they need to pay any tax. He claims that the only effect of the scheme would be that companies would have slightly reduced national insurance payments for their lower paid employees. Taxes are not particularly responsible for unemployment. Logically, employers are simply reluctant to take on new staff in a depressed economy, with a gloomy forecast for growth over the next few years, as they are not likely to see demand for their products and services increase. Reid argues that better schemes would be those like job training and investing in public housing, where immediate jobs would be created and the economy boosted.

Although controversial, a source at the Treasury indicated that it was too early to say whether or not George Osborne would adopt the mini-jobs scheme. Elizabeth Truss, who is convenor of the Free Enterprise Group is one of many Tory MPs who have put forward a scheme similar to mini-jobs. Liberal Democrats are thought to be sceptical about the scheme, appealing to the Chancellor to lower the targets for debt reduction, spend more of the budget on building infrastructure and put more money into short-term help for creating jobs and growth.

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