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Stephen  Bevan

‘Gis a Job Mr Beecroft

Authors: Stephen Bevan Stephen Bevan

22 May 2012

It is a bitter irony that, while I was waiting for the Beecroft Report to be published yesterday, my son – who has learning difficulties – was dismissed by his employer. He was the only employee in a small shop and for almost three difficult years has (and I must be careful here) not enjoyed the benefit of enlightened employment practices. Employers whose instincts are to behave in this way stand to gain enormously from Mr Beecroft’s vision for growth and labour market flexibility. After all, why should they need to justify summary dismissal, provide contracts of employment or comply with the Equalities Act when they’ve got businesses to run? It makes total sense that releasing small businesses from these tiresome burdens will miraculously unleash the ‘animal spirits’ of free enterprise and return the UK economy to its rightful place as a beacon of entrepreneurship.

Let’s take a closer look at what Mr Beecroft is proposing in his monument to evidence-based policy-making. A central argument is that growth has stalled because employers are discouraged from hiring people by the fear that they will face additional costs if they subsequently need to dismiss them. My guess, however, is that it is a lack of demand for the goods and services provided by such firms which is the real barrier to growth. If businesses have customers beating a path to their door then they hire people to meet the demand and before you know it we find ourselves – as so many times before – is a scenario where employers are bleating about skill shortages and the ‘war for talent’. So it’s demand in the economy which will drive growth. Anaemic supply-side measures to promote hire and fire practices are irrelevant.

So what about the stifling burden of regulation and red tape we hear so much about? Well, the evidence is that the UK labour market is not over-regulated. In fact, the UK already has one of the most lightly regulated labour markets in the industrialised world according to an index produced by the OECD. The UK scores especially low on the ease of dismissal, which is now slightly easier here than in the US. Paradoxically, it is considerably harder for employers in China or India to legally sack workers than in the UK. This should be a great source of national pride.

Finally, confidence and job security in the workforce also matters a great deal. I fear that there is a big danger that many in the workforce will regard reforms which make dismissal easier as a reason to feel less secure in their jobs. Even unreconstructed neo-liberal economists will tell you that job insecurity and confidence to consume are strongly linked. In 1998 over 60% of UK workers said they felt secure in their jobs. This figure rose to 67% in 2004 when the UK labour market was at its most buoyant. By comparison, YouGov data for the Good Work Commission in 2011 saw this figure sink to 45%. As demand in the economy will come from private consumption, eroding job security still further will do nothing to stoke the demand-side of the economy, nor will it promote growth.

So, with these proposals, Mr Beecroft is sure to be adopted as the darling of those in the business lobby who want to deregulate, transfer more risk to the workforce and use the barely concealed threat of summary dismissal as a motivational tool for ‘coasting’ employees. Call me an idealist, but I like to hope that there are many employers out there who know this to be a cruel folly and that, despite recession, it is only through providing Good work and decent employment conditions that the UK economy will thrive and sustain growth. For the sake of my now jobless son, and thousands like him – as well as the UK economy, I hope employers will recognise this.

 

Comments in Chronological Order (Total 3 Comments)

Philip Whiteley

25 May 2012 10:15AM

I only partly agree with this. It is true that the UK is not overly regulated, and that right-wing economists exaggerate the growth benefits of deregulation. But equally, and for similar reasons, the left and unions exaggerate the protective benefits of high regulations. It is actually a myth that exploitation and insecurity maximize profits. Unions perpetuate this myth with the 'social dumping' argument. Instead, they should help to build businesses, which is the best way to job security.

PamS

26 May 2012 6:42AM

I am not familiar with the political ramblings in the UK, I'm in the U.S., but I must say that your article is strong.

The modern day labor/anti-labor battle has been going on since the early 80's. For the U.S., it all started from the double digit interest rates, soring housing and food costs. Our new President used this to promote deregulation. At first, his reasonings appeared to pan out. The working force began to see the non-union, or what we call 'White Collor' workers get the same benefits as their union counter-parts, with more pay. What the majority of the working class did not see is that businesses were using a chunk of their profits to create an illusion that the working class was better without regulations and unions. Unfortunately, those big corporations investments worked. They knew in 15-20 years, and they began to cut back on salaries and benefits, until you have what we are faced with today. What what in their favor is that the majority of the workforce is too young to not remember how a worked was valued. We were not considered just a 'butt in the seat'. Companies knew their largest asset was the humans working for them. Yes, they demanded their workers stay abreast of technology, be productive, create reliable products, etc. Unfortunately, those ideals fell to the wayside for cheap labor that would allow for large profits margins that fuels the yearly bonuses of upper and mid management.

Just my 2 cents.

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