UK business should stop ‘seeing red’ over employment regulation, says the CIPD


Business lobbying against employment legislation uses statistics selectively and “flies in the face of economic evidence”, according to a report by the Chartered Institute of Personnel and Development (CIPD).

The CIPD’s report, “The economic rights and wrongs of employment regulation”, argues that the UK has the third-least-regulated labour market in the world and that there is “little convincing evidence” that the productivity gap between the UK and competitor economies is due to employment regulation.

The CIPD also argued that the rise in employment tribunal cases is partly due to an increase in multiple claims by individual claimants, alongside the impact of the recession, which saw more employees complain about being unfairly treated as organisations downsized.

Dr John Philpott, chief economic adviser at the CIPD, said that it was time UK businesses stopped “seeing red” over employment regulation and adopted a more unbiased, evidence-based perspective.

Philpott commented: “A balanced assessment shows that underlying problems of structural unemployment and productivity shortfalls in the UK economy cannot be attributed to any negative impact of employment regulation, but are due instead to relatively low rates of capital investment, long-standing deficiencies in the supply and quality of work-related skills, poor management of available skills in the workplace and work disincentives stemming from the operation of the welfare benefit system.

“Further deregulation of an already relatively deregulated labour market will do nothing to help solve these structural problems and might well exacerbate them.”

Philpott added that business organisations seemed content to accept official economic assessments that suggest regulations impose costs on employers, while questioning those that highlight benefits.

The report argued that the focus of regulatory reform should be on streamlining the red tape around employment regulation rather than watering down current employee rights. It also called on the Government to ensure that deregulation undergoes the same robust analysis as new regulation.

A summary of upcoming employment legislation can be found on XpertHR.

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