‘Gis a Job Mr Beecroft
Authors: 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.
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