Despite the warnings of doom, employment regulation has not lengthened the
dole queues, writes Stephen Overell
Unemployment sits at a 27-year low. On the International Labour Organ-
ization measure, the UK has lower unemployment than the US1. The Organisation
for Economic Co-operation and Development – the rich nations’ club – says that
while the British economy has slowed over the past year, it remains among the
strongest in the developed world and is as yet ‘lightly regulated’.
However, after five years of Tony Blair’s government ‘talking right and
acting left’, UK employers have been subjected to an unprecedented barrage of
new laws. During 1998 and 1999, there were 11 pieces of employment legislation
– the same number as there were in the 20 years between 1976 and 1996 (and some
of these were Mrs Thatcher’s deregulatory measures). Europe is only partly
responsible. Since 1997, 60 per cent of employment legislation has been
domestically inspired2. Another great dollop is coming next year.
What should we conclude? Hopefully, that the Jeremiahs were wrong –
pathetically wrong. The point at which Britain becomes an unattractive place to
employ people is still a distant spot on the horizon, while the relationship
between regulation and employability is evidently not the one marketed by
Predictions of doom and increasingly hysterical calculations of the cost of
labour market regulation – £6bn a year according to the Institute of Directors;
£12.3bn and £15bn since 1997, according to the CBI and British Chambers of
Commerce respectively – have yet to have much impact on the real world.
The same is true of other laissez faire votaries in academia. In a 1999
paper for the right-wing think-tank the Centre for Policy Studies, two orthodox
economists, Patrick Minford and Andrew Haldenby, argued the attempt to import
‘fairness’ into the labour market would compromise efficiency3. They said five
proposed reforms of 1999 (including the minimum wage, trade union recognition
and the Working Time Directive) would add £2.7bn to employers’ annual bills –
very thrifty, by the standards of such ‘guesstimates’. And, in addition, they
would lengthen dole queues by some three-quarters of a million.
Unfortunately, we cannot accurately say if unemployment would be lower than
it is today had the reforms not taken place. But on the broad point that
economic performance has been harmed, well, it doesn’t seem to have happened as
predicted. Not yet, anyway.
And besides, the economic case is only ever part of the story. One of the
least worthy attributes of many employers’ organisations is their enthusiasm
for cost-counting and their quietness on questions of the justice or otherwise
of labour market reform. Arguments of cost never worked with slavery, and they
are not much more effective against laws such as the national minimum wage
(NMW). Curiously, the IoD, which says the NMW has been the most expensive
single piece of legislation costing some £2.9bn, is not sure if it wants to see
it abolished. "We haven’t asked our members recently," says a
It often seems that in opposing employment legislation in the way they do,
employers’ organisations are merely defending their members’ interests just as
militantly as the trade unions used to, without being able to see beyond a
position of narrow partisanship.
Of course, employers instinctively hunger after a libertarian nirvana without
interference from busybody politicians. But 200 years after the Health and
Morals of Apprentices Act of 1802 – the first ever attempt to regulate the
employment relationship – it is neither wise nor just to believe the
convenience with which workers can be hired and fired should be the overriding
preoccupation of the law. The balance between the best legal framework in which
to be employed, weighed against the best legal framework in which to employ
people, is a subtle one that demands near constant adjustment.
However, arguing the employment relationship is fractionally fairer now than
it was in 1997, is not to deny that employers have had a lot to put up with.
Nor is it to suggest that all of the new rights are particularly urgent or
Rights always mean corresponding responsibilities for someone, and
employment laws are the time-honoured way for governments to pass the hat round
for social engineering projects.
With the majority of workers now employed in organisations of less than 15
people, the ‘average’ business now spends £9,0004 a year administering
workplace laws. Legislating at the pace New Labour has, inevitably creates
problems. The Better Regulation Task Force’s report this summer was the first
authoritative acknowledgement of the feeling among employers that they are
cats-cradled in regulation.
In a telling line from its report, it said: "When we asked them about
this, government officials said it would be impossible for them to know
everything about the employment regulations implemented by all departments –
but that is what is expected of employers."
Yet a gathering trend in employment law seems to be that it is not just
employers who must bear the responsibility of increasing rights for some.
Just as women have to work an extra five years to pay for the equalisation
of retirement ages, so too it seems that workers without children will bear
much of the burden of the flowering of new rights of parents. Rights to
flexible working, enhanced maternity and paternity leave are all very well, but
will childless employees be happy to work late so that their colleagues can
leave early to pick up their kids from school?
As anyone who works full-time will know, part-timers usually mean more work
for everyone else. It is an instance of employment law becoming increasingly
divisive – possibly even discriminatory against the childless. The unspoken
incentives for employing white, able-bodied and preferably celibate men, are
starting to loom large.
Prior to 1997, Europe was the only hindrance to employers who wanted to use
their power despotically. Tony Blair’s government has adjusted the employment
relationship slightly in favour of employees, and, thus far, Britain can well
It’s just that there has been an awful lot of law for a very marginal
increase in fairness.
1 Office for National Statistics, press notice, 12 September
2 Employment Regulation: striking a balance, Better Regulation Task Force,
3 The Price of Fairness, Centre for Policy Studies, 1999
4 Federation of Small Businesses, 2002
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