Mangan, D.

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Labour regulation as stimulus foreconomic growthRegulating for Globalization09/01/2018David Mangan (City, University of London)Please refer tot his post as: David Mangan, ‘Labour regulation as stimulusfor economic growth’, Regulating for Globalization, 09/01/2018,http://regulatingforglobalization.com/2018/01/09/labour-regulation-stimulus-economic-growth/Employment regulation as an economic stimulus draws attention to theconnection between aims and actions. The United Kingdom should remain anintriguing study in this regard. As of 2019, the UK moves into the ‘GlobalBritain’ or ‘British Way’ era in which the country rebuffs EU-negotiatedtrade agreements and instead aims to negotiate similar if not better termswith the same countries as an individual trading partner.A slowing economy (as forecast by the OECD) coupled with the inherentuncertainty stemming from the 2019 departure indicate that employmentregulation will likely continue to be an area with perceived potential foreconomic stimulus. And so, the following pre-Brexit illustrations offer sometexture to the developing landscape (though certainly not the entireterrain).Labour Regulation to Help SMEsWhether it is based upon austerity, globalization, or something else,employment regulation has been a malleable tool for government. TheConservative-Liberal Democrat Coalition of 2010-2015 passed a number ofemployment law reforms. In April 2012, the Coalition passed a newqualification period of two years (from one-year) of consecutive employmentwith the same employer for unfair dismissal protection, through the UnfairDismissal and Statement of Reasons for Dismissal (Variation of QualifyingPeriod) Order 2012. In his report commissioned delivered prior to this Order,Adrian Beecroft wrote of the difficulty employers had in determining withinone year whether individuals were appropriate for the workplace. While theproposition may be queried (how much time is needed for such adetermination), small-to-medium sized employers (SME) comes to mind. Asrecommended by the European Commission, SMEs are employing enterprises withbetween 1 and 249 workers. It may be conjectured that the SME may need alonger period of time in order to determine whether or not a worker ‘fitsin’. SMEs (which account for approximately 60% of private sector employmentin the UK) are perceived as a particularly fragile cohort, though one ofparticular economic importance.In announcing the introduction of fees (including filing and hearing charges)for bringing employment claims, then-Chancellor George Osborne declared anend to ‘the one way bet against small businesses’. These reforms, arisingwithin the context of austerity stemming from the Great Recession of 2008,would stimulate economic growth, and in particular the growth of small tomedium-sized businesses. The perceived potential cost to employers wassufficient to compel action: ‘The risk is that the fear of being faced withtribunal claims impedes growth because businesses become too cautious to hirepeople or to address capability issues in the workforce’.Given the present state of the UK’s relationship with the EU, the selectedexamples should not be read as legislative steps foreshadowing a referendumvote to leave the EU. Rather, these instances underscore that recent efforts,though pre-dating Brexit, have been made to use employment regulation as abasis for economic stimulus.Shared Concern for SMEsSMEs must remain a point of continued focus. This would likely entailgovernment prioritizing a positive business environment for an efficientlabour market, benefitting this cohort. It should be noted that the UK sharesthis focus on SMEs with the European Commission (EC) which has devised theprogramme for the Competitiveness of Enterprises and Small and Medium-sizedEnterprises (SMEs), running from 2014 to 2020 with a planned budget of€2.3bn.Belief and EvidenceThere is no critique here of regulating in ways that can effectively assistSMEs. Rather, actions should be more nuanced and thoughtful so that theseaims may be realistically met. The underlying government concern for SMEscomes out in the two above examples. Seeing this as a broader regulatoryfocus is instructive: it is a one-size fits all framework, complicated bycertain factors. SMEs prefer an informal work environment. Moreover, thiscohort as a whole has not necessarily signaled that regulatory change willcreate the desired effect (increased employment): the number of workers theyemploy has been decreasing over time. Perhaps most troubling, this cohortseems to be a particular challenge to inform: when the unfair dismissalqualification period was doubled, a study found that knowledge andunderstanding of this fact was questionable. And so, a framework catering toSMEs may not entirely serve stated goals.

'Labour regulation as stimulus for economic growth'

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'Labour regulation as stimulus for economic growth'

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