Employers have been offered a £2,500 cash bribe to find jobs for the 14,000 Birmingham residents who have been unemployed for more than six months.
Gordon Brown launched the jobs drive following predictions that unemployment across the country could reach more than three million next year.
Firms will be offered a £1,000 subsidy to help pay for the costs of recruitment, as well as £1,500 for training new staff.
The money is available to firms hiring workers who have been unemployed for six months or longer, such as the 14,515 long-term unemployed people in Birmingham.
There are currently 7,961 vacancies advertised in the city’s job centres, according to official figures.
The “golden hellos” will be paid for with £500 million from the Government’s fiscal stimulus package announced last year.
Alternatively, claimants will be able to use the money themselves, either to help them set up their own businesses or to pay for training courses.
But business leaders in the city warned that it would be “unwise” to take on new staff while the economic outlook is so grim.
Kiran Virk, policy adviser at Birmingham Chamber of Commerce and Industry, said ministers should focus on protecting existing jobs – particularly in motor manufacturing.
She said: “Many of our members in the supply chain to car manufacturers, are having to introduce shorter working weeks and are looking at ways to avoid carrying out compulsory redundancies.
“Taking on more staff in the present economic climate, as the Government is suggesting, would be unwise as local businesses struggle to gain orders and therefore work for their current workforce.”
What businesses really needed was access to loans to help them with cashflow, she said.
“The business community at large is facing difficulties in accessing commercial loans to help them invest in their business to see them through the downturn.”
To qualify for the subsidies, employers will need to join the Government’s Local Employment Partnerships scheme, in which they work closely with Jobcentre Plus to recruit staff, and Train to Gain, a scheme which subsidises workplace training. Mr Brown set out the Government’s proposals as he met business leaders during a summit in London.
Conservatives welcomed the announcement, saying they had been calling for a similar measures for months.
Solihull’s Liberal Democrat MP Lorely Burt said the rising level of unemployment was “deeply worrying”.
Official figures show 1,123 people have been claiming Jobseekers Allowance in Solihull for more than six months.
She said: “I am very concerned about the effects the current downturn is having on people across Solihull borough and the region as a whole. Jobs are being lost in almost every sector.”
Mr Brown will today discuss the international economic crisis with the chairman of the US Federal Reserve, Ben Bernanke, at 10 Downing Street.