'Back in the 1980s when we did that, the result was that employment started shooting up again.' So said Lord Young of Graffham, the Coalition’s new enterprise Tsar on the radio this week. What job-spinning magic did he have in mind? Why, nothing less than that favourite political yo-yo, the qualification period of service before an employee can claim the right not to be unfairly dismissed.
Currently one year, courtesy of a New Labour reform of 1999, Lord Young plans to examine whether two years might be more appropriate, thus limiting how many people gain employment rights and giving employers greater ease of hire-and-fire.
And who, pray, was responsible the last time the qualification period was doubled way back in 1985? None other than Lord Young who was employment secretary under Margaret Thatcher between 1985 and 1987. Prior to 1979, the qualification period was six months. To a casual observer it might look a little like a quixotic crusade.
There is no political monopoly on faith in the law to sort out the troubles of the workplace, but my hunch is that Lord Young may not have meant his words to come out quite in that way. The deep manufacturing recession of the 1980s (“three million unemployed” is still a politically charged phrase today), sustained by an over-valued pound, high interest rates and the deflationary impact of monetarism, was unlikely to have been brought to an end by a relatively obscure alteration to employment law. It is true that jobs increased after 1986, but factors other than employment law are more powerful explanations: a coincidence rather than a cause, perhaps.
Doing things that make life easier for businesses in times of low growth and high-ish unemployment may make sense. But the notion that there is some kind of iron law linking employment law and the employment rate is very hard to substantiate with evidence: countries with (by UK standards) demanding labour law can achieve decent employment rates (eg. Denmark, Netherlands, Norway) and countries with weak labour law (eg. the US) can struggle to create jobs. Wider macro-economic and financial policy will always count in a way interest-group pleasing tweaks to labour law will not.
A more certain effect of Lord Young’s proposed move, should he choose to pursue it (this is only one of several strands of his review of burdens on business) is that the number of claims going to employment tribunals is likely to fall – by something in the region of 10,000 claims.
Back in the 1980s, individual rights claims to employment tribunals were very few by today’s standards - around the 40,000 a year mark, compared to today’s 160,000 level. Yet there was a sharp fall in tribunal claims in 1986 following his reform. When Labour halved the qualification period in 1999 the numbers who sought to take their cases to tribunals went up by well over 10,000. Unfair dismissal is the single most prevalent reasons why people bring a case to an employment tribunal, accounting for 45 per cent of all cases.
Cutting the numbers of tribunal claims has been an objective of policy for some time. But this consideration needs to be balanced against the Big Society fairness the Coalition prizes highly. In my view, two years seems an awful long time to wait before one’s entitlement to even fairly basic employment protections kicks in.
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