Alex Hern rebuts Adrian Beecroft's claim that cutting employment rights will increase employment.
A leaked report, commissioned by David Cameron from venture capitalist Adrian Beecroft, calls for the “terrible impact of unfair dismissal rules on the efficiency and hence competitiveness of our businesses” to be ended by allowing dismissal of employees for any non-discriminatory reason, at any time, by paying redundancy and notice time.
It can’t be any coincidence that this sop to the right wing of the Tory party comes just 24 hours after the Prime Minister faced a massive revolt by his backbenchers demanding a referendum on Europe.
It is despicable that this government seeks to appease its voracious right wing by promising to crush any powers to defend themselves that workers in this country may have left.
UK workers are already the cheapest and easiest to sack in the European Union. Now David Cameron plans to take the nation further back to the dark days of ‘hire-and-fire.’ That is not in any way a plan for growth – it’s a pathway to workplace misery and a demoralised and less productive workforce.
This is a government in thrall to its vested interests – a rabid business lobby and an-out of-control right wing of the Tory party. With every day they remain in office, this country becomes a more unhappy and unequal place.
As those who study the evidence on industrial tribunals know, the system works extremely well to root out so-called vexatious claims. Continuous peddling of poisonous myths by the likes of Mr Beecroft does not make these distortions true.
As we have argued before, despite Beecroft’s claims to the contrary, shredding workers’ rights does nothing to decrease unemployment. Sara Ibrahim reported, in reply to Osborne’s policy of making it harder to bring unfair dismissal claims:
Dr John Philpott, the chief economic adviser at the chartered institute of personnel and development, sees little merit in the proposal. He 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.
Richard Exell compared the UK to the rest of the OECD, and found that we already have relatively anaemic workers’ rights:
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 Conservative party is attempting to make Britain competitive internationally by cutting costs, cutting rights, and cutting the social safety net. As we reported earlier this month, this approach will not work:
We should not try and see who can treat their workers worse or try and capture the market in low skilled, low paid and badly treated labour, but we should instead sell ourselves to companies on the quality of our workforce; on their education, on their ability and on the welfare state that ensures that the baseline is high. Winning business in this way is not a pipedream.
Slashing employment rights, to try and compete with those countries which have none, will not win us any business but just lose us the position that we fought so hard to gain.
Finally, a Liberal Democrat MP speaking on the BBC News channel earlier made the point that making people easier to dismiss will greatly impact consumer confidence, and harm the recovery. Whereas some people are confident in their employment security now, and content to spend most of their income, if they are at the risk of dismissal at any time for any reason, they will inevitably save a much higher proportion of their income than they would otherwise.
This leads to the paradox of thrift; large numbers of people saving reduces demand and harms the economy.
So this measure will not increase employment, will not make us more competitive overseas, may even harm the recovery, and will cause untold personal misery. Instead, it has provided yet more ammunition to those who would decry the Conservatives as the party of the rich. As Paul Kenny, general secretary of the GMB, said:
This report shows the true face of the nasty Tory Party who are, in fact, the political wing of the rich and the elite.
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• Reducing job security won’t decrease unemployment – Sara Ibrahim, October 4th 2011
• Gideon’s grotesque attempt to blame workers’ rights for unemployment – Richard Exell, October 3rd 2011
• Osborne dreaming of a race to the bottom – Alex Hern, October 3rd 2011
• New rights for agency workers point to a better economy for all – Daniel Elton, August 26th 2011
• Cutting workers’ rights will not increase employment – Nicola Smith, January 10th 2011