Osborne’s solution to unemployment? Make it easier to unemploy people

George Osborne reignited his war on working people last night by urging company bosses to lobby the government - ie. him - to make it easier to sack staff.


George Osborne reignited his war on working people last night by urging company bosses to lobby the government – ie. him – to make it easier to sack staff.

The Telegraph reports:

Mr Osborne suggested in a speech on Tuesday night to engineering firms that they should directly lobby [employment minister] Mr [Norman] Lamb about the changes, to avoid them being watered down by unions.

He said: “We’re beginning a call for evidence on the case for a new Compensated No Fault Dismissal for our smallest businesses.

“Plenty of trade unions and others will be submitting their evidence for why we shouldn’t do this. If you think we should, and it will increase employment, then don’t wait for someone else to send in the evidence. Send it in yourself.”

The proposals were intended to apply to all firms when first suggested in a report for Downing Street by venture capitalist Adrian Beecroft last October.

The plans, which were leaked to The Daily Telegraph, proposed making it easier for all companies to dismiss unproductive workers within explanation. It claimed that current rules allowed staff to “coast along” with no action from management.

These proposals, to reduce unemployment by making it easier for people to be made unemployed, are ideas we’ve long rebutted on Left Foot Forward, as some of the links at the foot of this piece show.

As Richard Exell explained, saying workers’ rights are to blame for unemployment is as inaccurate as it is abhorrent:

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.

Indeed, one has to wonder how much lower down the employment protection league (see Chart 1) Osborne et al want the UK to slip, as Left Foot Forward pointed out:

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.

Chart 1:

A point reaffirmed by Declan Gaffney:

The notion of a simple trade-off between employment levels and employment protection is increasingly unrealistic.

Some, but not all, of the employment growth in Europe reflects selective deregulation over recent years, but this was from levels of protection which were far higher than those in the UK – and still are today, albeit with some convergence.

Deregulation of labour markets is not an open-ended route to increased employment, it is a strategy with diminishing returns. When protection is as low as it is in the UK, we should expect those returns to be minimal. The assumption that there are big employment gains from reducing employment protection in the UK from its current low levels belongs to the last century.

While employment lawyer Sara Ibrahim wrote about how, as per usual under this coalition, it’s the lowest paid who’ll suffer the most:

Disputes in the workplace happen. The correct way to reduce claims is to increase mediation between the parties and ensure organisations comply with existing regulations. Preventing people from issuing unfair dismissal claims is a mistake. All it shows is a lack of commitment on the part of this government to access to justice and a disregard for the low paid.

As shadow Treasury minister Owen Smith said last night:

“With unemployment at a 16 year high, the government should be making it easier for small businesses to hire people, rather than easier to fire people…

“The slower growth and higher unemployment this government’s reckless policies have delivered mean £158 billion of extra borrowing to pay for economic failure. That is why we desperately need a proper plan for jobs and growth in this month’s Budget. It’s time this complacent and out of touch chancellor listened and changed course.”

We can but hope.

See also:

If Liz Truss wants to be more like Germany, she should boost workers’ rightsAlex Hern, February 20th 2012

Relaxing worker protection to boost employment belongs to the last centuryDeclan Gaffney, November 16th 2011

Raab’s attacks on workers’ rights are – surprise – based on no evidenceSarah Veale, November 16th 2011

Cameron and Osborne want the unemployed to work for £1.78 an hourAlex Hern, November 10th 2011

Commons to vote today on Labour’s five-point plan for jobsShamik Das, October 12th 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

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