Cable falls in line with Beecroft’s anti-worker voodoo economics

Alex Hern reports on Vince Cable's announcement of his and his department's support of Conservative donor Adrian Beecroft's anti-worker employment reforms

Vince Cable prepares to hand in his social democratic card for good

Vince Cable has signed up to the Conservatives’ battle against employment rights today, announcing his support of the vast majority of venture capitalist and Tory donor Adrian Beecroft’s report on employment law.

The Guardian reports:

Companies employing fewer than 10 staff may be exempted from employment regulations … to promote economic growth.

In a speech on Wednesday Cable will say the coalition has agreed other areas of employment law reform. He will announce:

• A consultation on introducing “protected conversations” to allow employers to discuss an employee’s poor performance or retirement in an open way that could not be used in a tribunal claim.

• An overhaul of tribunals that would mean all claims initially go to the Advisory, Conciliation and Arbitration Service. Witness expenses would be ended and only one judge would be used in unfair dismissal cases.

• A further consultation on simpliflying the use of compromise agreements in which employers pay an agreed amount to an employee if both sides agree that a contract of employment should end.

The one concession to the social democratic wing of the Liberal Democrats was Nick Clegg’s blocking of the central pillar of Beecroft’s report, which was to allow employers to dismiss any employee at any time without fault on the employees behalf. For this, we should be glad; as we reported last week, it is a terrible idea:

This would leave it entirely at the employer’s discretion to decide whether or not someone was under performing, with no system for reviewing the problem, putting in measures for improving the person, taking account of illness or the contribution of poor management to the poor performance. You cannot seriously propose to have an employment system based on hire and fire at will.

The aim behind all of these reforms is to boost the economy, but as we have reported again and again and again, cutting workers rights will do no such thing.

As Nicola Smith reported in January:

During its last period in office the Labour government introduced a number of measures which improved rights at work – for example providing employees with protection from unfair dismissal after a year of employment, introducing the minimum wage and introducing entitlements to more generous maternity leave.

The empirical evidence demonstrates that these measures did not have negative impacts on employment levels – indeed prior to the global recession employment rates were at their highest for decades. The reality is that strong employment rates are a concequence of a country’s overall economic strength, not its level of employment protection.

Sarah Ibrahim in October:

[Dr John Philpott, the chief economic adviser at the chartered institute of personnel and development] says that the evidence is that less job protection encourages hiring in boom periods but increased firing in bust periods. It therefore makes employment rates less stable during the economic cycle.

However, it does not change the fundamentals – the number of people in secure employment. He strongly takes the view that this will be detrimental for the long term prosperity of the economy by undermining any spirit of engagement between staff and management. It seems out a bad signal to people at a time when they are already feeling vulnerable.

And Richard Excell, with the killer evidence:

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 the chart below shows, only the USA has a less regulated labour market.


As Mehdi Hassan pointed out this morning:

Those who claim link between cutting red tape and job creation have to first explain why America has nine per cent unemployment.

Between scrapping employment rights, real terms cuts in benefits, and the moves to stop the poor having too many kids, it is clear that there is one group of class warriors in parliament, and they’re the Bullingdon boys running the country.

See also:

Cameron continues Gideon’s race to the bottomAlex Hern, October 26th 2011

Reducing job security won’t decrease unemploymentSara Ibrahim, October 4th 2011

Gideon’s grotesque attempt to blame workers’ rights for unemploymentRichard Exell, October 3rd 2011

Osborne dreaming of a race to the bottomAlex Hern, October 3rd 2011

Cutting workers’ rights will not increase employmentNicola Smith, January 10th 2011

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  • Prateek Buch

    Sorry Alex but I have to take issue with this post.

    Firstly, I’m sure you appreciate that the increased dependence on arbitration and mediation is a good thing? The more claims settled before landing in court the better I’d have thought – correct me if I’m wrong.

    Secondly, dismissing Beecroft’s central policy recommendation of ‘fire-at-will’ isn’t just a side-effect – it demonstrates that Lib Dems won’t allow the arbitrary dilution of workers’ rights. It might be useful to imagine what a government without Lib Dems in it would be doing to workers’ rights at this time as a counterfactual scenario and then think again.

    This doesn’t diminish your central point that focussing on reducing workers’ employment protection is unlikely to lead to economic growth – I agree with that and have said so before.

  • Rupertreadrules

    ‎’Making it easy to ‘hire & fire’ people’ is unspeak, spin.. What they mean of course is simply: making it easy to FIRE people..

  • Ray_North

    Vince Cable’s announcement this morning are disgraceful – I never thought that I would see Cable as the man to undo much of the progress that has been made in the world of employment rights over the last thirty years.
    On a similar subject we address the issue of youth unemployment on Allthatsleft today:

  • Blarg1987

    I think the main concern is like when tuition fees were introduced once you open the floodgates, things can only go one way.
    I agree the Lib Dems are good at holding the goverment back on this policy, but it could backfire for them at the next election if the Conservatives say the economy is improving or stable etc, while the Lib Dems will only be known for going against the proposal to scrap tuition fees

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  • Newsbot9

    There is already arbitration once a tribunal is filed for. All this means is that an unwillingness to “settle” for part of an award will be held against the employee.

    “Secondly, dismissing Beecroft’s central policy recommendation of ‘fire-at-will’ isn’t just a side-effect – it demonstrates that Lib Dems won’t allow the arbitrary dilution of workers’ rights”

    No. just calculating that THIS time it’s not acceptable, that other attacks need to be made first. The UK needs far far STRONGER rights, not weaker ones.

    “It might be useful to imagine what a government without Lib Dems in it would be doing to workers’ rights at this time”

    No meaningful difference.

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  • DGillon

    So anyone working for an employer with 10 or less employees will suddenly find themselves able to be blackmailed into doing whatever the employer wants without recourse to law. Meanwhile, open management bullying will be disguised as ‘protected conversations’ and workers will be pressured into accepting ‘compromise agreements’ to leave them redundant just to stop the bullying – which is effectively Beescroft’s proposal under another name. I’ve advised enough people being bullied by management over disability issues, supposedly with greater protection than most through DDA and now EA, to know exactly how the system will work in practice if people are left with no protection whatsoever, no matter the LibDems’ claim they’re actually protecting workers.

    The longer the Coalition lasts the more I’m embarrassed for the LibDems, a party I once admired for their ethical stance even if I didn’t support their policies.

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