The UK’s largest sectoral employers’ organisation has slammed the Beecroft report, saying the measures suggested have “little support from industry”.
The UK’s largest sectoral employers’ organisation has slammed the contents of the Beecroft report, saying the measures suggested have “little support from industry”.
“Its benefits would be limited and… it would make little or no difference to recruitment plans. [EEF] also believes that the proposals risk undermining the gains that employers have made in increasing flexibility and productivity by working more collaboratively with their employees.”
The chief executive of EEF, Terry Scuoler, said:
“The government is right to focus on making our labour market more flexible, but the case for no-fault dismissal is far from proven. We’ve found little support from industry for introducing no-fault dismissal, its benefits look pretty limited and we’ve seen no evidence that it would increase recruitment.
“The government now needs to take a hard look at whether the claims for its benefits are real, and at the risk of damaging employment relations. We are concerned that the controversy over no-fault dismissal is distracting attention from the issues that really matter to business.”
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.
• Osborne’s dogmatic return to Thatcher-era employment law 10 Apr 2012
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.
At a time when unemployment is so high, the government cannot start pandering to the priorities of a few big business owners.