by Jack Copley
Amongst these measures, bosses wishing to make at least 20 redundancies will have to consult employees only 30 days in advance as opposed to the current 90-day limit, while the number of unfair dismissal cases that reach employment tribunals will be slashed. Furthermore, the Prime Minister has supported a proposal by venture capitalist Adrian Beecroft to allow employers to ‘fire at will’ – making employees who are perceived to be ‘coasting’ redundant without providing an explanation.
The government is rehashing its favourite argument that cutting this ‘red tape’ surrounding employment practices could be vital in spurring the economy and allowing companies to start hiring again. Speaking to the Confederation of British Industry (CBI), Cameron said:
“People who ask ‘what do radical deregulation and reforming employment law have to do with the immediate priority of getting growth?’ miss the point. The answer is simple: If we want a new economy and a new type of growth we have to act to make it possible”.
However, Cameron will have trouble providing the wealth of reliable evidence that is required to justify such a historic restructuring of our employment law – as it does not exist.
According to renowned Oxford economist Andrew Glyn, the argument that deregulating employment protections in Europe would have a significant effect on joblessness is not borne out by evidence from cross-country analyses. The OECD's own data shows that there is no evidence that 'reform' of employment regulation is linked with a significant fall in unemployment. Not only does this argument “lack empirical justification” but also the benefits of employment regulation “in terms of a wage floor, income security, job security and conditions at work are frequently ignored”.
In a wide-ranging analysis of the contemporary economics literature, Harvard Economics Chair and award-winning economist Richard Freeman argues that “researchers have not pinned down the effects, if any” of employment deregulation on economic outcomes such as unemployment. While evidence of the impact of employment deregulation on economic performance has been incredibly illusive, Freeman says that evidence consistently links reductions in job protection (and other employment regulations) with increasing earnings inequality.
Not only is the targeting of employment protection to boost economic growth unsupported by cross-country data, but it is especially ridiculous in reference to this country. The UK has the third lowest employment protections in the OECD – with a job protection ranking that is less than half the OECD average. Trying to squeeze further economic gains out of our already insecure workforce is like going around pawning homeless peoples’ clothes to pay off our national debt, in that any possible increases in employment would be miniscule compared to the social costs.
So what are the social costs?
In the long term, these changes will doubtlessly undermine trade unions’ already desperate efforts to organise employees. Insecure work environments make organising with co-workers, let alone taking strike action, a far riskier venture – especially when bosses hold discretionary firing powers like those they would be granted under these new proposals. Without trying to peer into the future, it is not difficult to imagine how these changes would further depress union activity in this country, making it far easier for the government to chip away further at employment/wage laws and generally act with impunity.
However, of more immediate concern is the psychological effect on employees. A survey released this October by the Chartered Institute of Personnel and Development showed that “stress is, for the first time, the most common cause of long-term sickness absence for both manual and non-manual employees”. They link this explicitly with job insecurity.
“Employers planning to make redundancies in the next six months are significantly [18%] more likely to report an increase in mental health problems among their staff”.
In fact, analyses of job security and mental illness in Australia robustly suggest that an insecure working environment is just as damaging to mental health as unemployment – leading researchers to beg employers to “take the mental health of their employees as seriously as they would their physical safety”.
How sadistic must the Coalition be to propose measures that will further jeopardise the mental wellbeing of Britain’s already insecure and stress-ridden workforce when there is absolutely no solid evidence that it will have any positive impact on the economy? To what level would our government stoop to wring a single drop of growth out of our economy without actually spending?
What the government and the CBI view as ‘red tape’ is to ordinary people an assurance that when they go to sleep at night they can be confident that they will have a job in the morning. An assurance that they will have a means of supporting themselves and their families when they wake up. It is an issue that is intrinsically linked to mental health, alcohol/drug abuse, domestic violence, and societal wellbeing – an issue that we cannot afford to act on with such an absence of justification.
