David Kern, chief economist at the BCC was commenting in the light of figures released by the Office for National Statistics which showed that unemployment rates rose by 6.3 per cent in the last three months of December.
Mr Kern said that businesses are keen not to "lose key staff" but are being hampered by lack of cash-flow.
He suggested that the government needs to intervene by "cutting business rates, freezing the national minimum wage and scrapping plans to increase National Insurance".
All of these measures, he said, would help companies to "keep hold of employees".
Specialist financial and banking recruitment consultancy FSS recently said during the recession employers need to provide their staff with "reassurance and good communication".
