Regulation “not the answer” to fixing labour market

According to new research, the UK’s flexible labour market is generally working well in comparison with our international peers, suggesting there isn’t a strong case for the next Government to either de-regulate further or to strengthen employment rights.

The HR organisation’s report, Employment Regulation and the Labour Market, indicates that the UK is highly unlikely to get much benefit from more employment regulation or from significant deregulation of the labour market, as it already performs well in comparison to many of its OECD counterparts on a number of measures. 

“The public debate can often seem polarised between calls for greater regulation and employee protections from trade unions and, at the other end of the scale, employer organisations that want to reduce regulatory burdens on business,” says Ben Willmott, head of public policy at the CIPD. 

Regulation and productivity

The link between the stringency of regulation and labour market outcomes such as productivity or job quality is in many areas either weak or complex and thus difficult to predict. 

Instead, the CIPD is urging policymakers to focus efforts on improving productivity through a much stronger focus on improving workplace practices while increasing awareness of existing rights and enforcing them more effectively.

In comparison to other OECD countries, the UK has a high share of permanent employment – 79 per cent of UK workers in 2013 were on a permanent contract, compared to 77 per cent in Germany and 65 per cent in Italy.

Compared with the European average, the UK has a larger proportion of “good” jobs and a smaller proportion of “low quality” jobs. Overall 65 per cent of jobs in the UK are rated as good jobs, compared to just 54 per cent in Italy, 50 per cent in France and 49 per cent in Germany.

The average weekly hours worked by employees in the UK in 2013 was 36, which was in line with the OECD average. However the UK does have a comparatively high proportion of long hours jobs (those involving 50 hours or more a week) with 12 per cent falling into this category.

In all, 84 per cent of UK workers say they are satisfied with their working hours (EU 28 average 80 per cent) and 77 per cent report they are satisfied with their work-life balance (EU 28 average 74 per cent). 

“Our report shows that more or less regulation is not the issue. Overall, UK workers are more satisfied with their jobs, working hours and ability to progress than their counterparts in France, Germany and Italy,” continues Willmott.

“The solution to some of the challenges we face in the UK such as poor productivity and the high proportion of low paid jobs in the economy doesn’t lie in quick legislative fixes. We don’t need yet another employment bill or another zig-zag between more and less regulation.”

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