In his speech today George Osborne confirmed press speculation the government plans to restrict eligibility for protection from unfair dismissal to people employed for two years and is going to introduce a deposit for taking a case to a tribunal that will be lost if the case is lost.
At a time when people are more depressed about the economic future than for a long time it is unlikely taking away their rights at work is going to make them happier. Young people, in particular, will be hardest hit – they are, after all, much more likely to have been employed for less than two years.
Vulnerable workers, especially those without a union to support them, will be most likely to be intimidated into not taking a case to tribunal, even when it’s a good one.
And all this for really dubious economic benefits. When the Labour government brought that threshold down to one year there was no noticeable impact on employment, and there’s precious little sign of employers demanding this.
Take just today’s news:
• The CBI’s financial services survey found employment has been growing more slowly than expected and firms are scaling back on investment, not because of labour market regulation, but because of “uncertainty about demand and business prospects, and inadequate return on investment”;
• Markit’s Purchasing Managers’ Index for manufacturing reported manufacturing employment has been falling, not because of the rules on unfair dismissal, but because of “company restructuring, non-replacement of leavers and the ongoing subdued underlying trend in new orders”;
• John Philpott, the chief economist at the CIPD (the professional body for personnel managers) says there’s very little evidence it will promote jobs – the most likely impact is to make the labour market more volatile.
By international standards, the UK does not have a tightly regulated labour market. If we take the OECD’s index of labour market regulation, the UK is right down at the bottom of the table. As Chart 1 shows, only the USA has a less regulated labour market.
The chancellor’s speech was (amongst other things) a transparent attempt to shift the blame for unemployment to workers’ rights. No one will gain a job because of these changes – but plenty of low paid and insecure workers will find they have no recourse when they are treated unfairly.
• New rights for agency workers point to a better economy for all – Daniel Elton, August 26th 2011
• The Right’s prescription of more of the same ignores the evidence – Nicola Smith, July 26th 2011
• Health and Safety cuts: Criminal businesses let off the leash – Steve Tombs and David Whyte, March 26th 2011
• Employment tribunal reforms will further erode workers’ rights – Ruwan Subasinghe, February 7th 2011
• Cutting workers’ rights will not increase employment – Nicola Smith, January 10th 2011