The TUC have said the government’s latest employment reforms “will not save a single job” but instead “make it easier to sack people”.
Employment relations minister Jo Swinson announced plans to halve the redundancy consultation period (the duration before large-scale dismissals can take place) to 45 days, and also to exclude fix-term contracts from collective redundancy agreements when they end.
TUC general secretary Brendan Barber responded:
“The last thing we need is for the government to make it easier to sack people… These measures will not create a single extra job. The idea that an employer will change their mind about taking someone on because the statutory redundancy consultation period has been reduced from 90 to 45 days is close to absurd.
“Removing consultation rights from fixed-term contract staff will seriously increase job and financial insecurity for vulnerable groups of workers, and temporary staff will lose out on redeployment opportunities.”
With University and College Union (UCU) general secretary Sally Hunt adding:
“Casualisation in our universities and colleges remains the unacceptable underbelly of post-16 education and these changes send a very worrying message to staff. Employers should maintain collective consultations whether or not they remain a legal requirement, as it is good for staff and institutions to engage in positive dialogue.
“Jobs for early careers staff in further and higher education are already notoriously insecure; making the situation even worse could result in many considering different career paths.”
As Barber and Hunt point out, these latest measures (as with all employment law reforms outlined by the coalition thus far) will make it easier for bosses to sack workers, and, as Left Foot Forward has long pointed out, is not only wrong in principle but won’t actually reduce unemployment and kickstart the economy.
As Declan Gaffney showed on these pages last year, there are two big problems with the assumption deregulation will reduce unemployment:
The first is that the UK labour market is already one of the least regulated among comparable nations. This immediately makes predictions of any significant employment effects from further deregulation implausible.
The second is that nations with much higher levels of regulation have been at least matching and in some respects exceeding employment performance in the UK and other low regulation countries for some time.
Meanwhile the exemplary low regulation economy, the United States, has registered an abysmal employment performance at least since the turn of this century. The idea of lower regulation as a route to employment growth is therefore a particularly hard sell these days.
Taking these points in turn, the UK has the third lowest level of employment protection of all OECD nations. It is ranked 7th in the world for labour market flexibility by the World Economic Forum. Chart 1 below shows where the UK fits in a sample of comparable wealthy nations. (Tories try to argue, absurdly, that the UK has a particularly high level of labour market regulation.)
In the chart, these countries are colour-coded into three ‘families of nations’ using a standard classification based on geography and welfare state institutions. The point of grouping countries in this way is that we can compare employment performance with levels of employment protection.
The red columns, which generally show the highest levels of protection are continental Western European (CWE) nations; the blue countries with very low levels of protection are the English-speaking (Anglo) nations while the green Nordic countries are in an intermediate position, but closer to the CWE nations.
Because the United States has the lowest levels of protection, it is worth looking at how it compares with countries in the much more regulated CWE and Nordic groups. We show results for people of prime age (25 to 54) from 1991 to 2009. (The reason for concentrating on this age band is that its employment is less affected by educational participation and pensions policies.)
For men, prime age employment in the U.S. peaked at the end of the last century and then fell sharply. Although there was some recovery in mid-decade, employment remained far lower than in the late 1990s, before plummeting with the last recession. The CWE countries overtook the US at the turn of the century and the Nordic countries in 2005.
The evidence is clear – but don’t expect Swinson, Osborne and Cameron to listen…
• Osborne’s solution to unemployment? Make it easier to unemploy people – March 7th, 2012
• Reducing job security won’t decrease unemployment – October 4th, 2011