UK’s flexible market works well against OECD peers, finds CIPD
Increasing or cutting employment regulations is unlikely to boost the UK’s labour market, according to research from the CIPD.
The report Employment Regulation and the Labour Market found that regulatory changes would have little impact because the UK’s jobs market already performs well in comparison to many of its peer countries in the Organisation for Economic Co-operation and Development (OECD).
For this reason, and with less than 100 days to go until the general election, the institute warned politicians against using regulatory changes as a main plank in their campaigns.
Highlighting how well the UK’s jobs market performs, the report showed that it has a high share of permanent employment, 79 per cent, compared to 77 per cent in Germany and 65 per cent in Italy.
Britain has a larger proportion of good quality jobs – based on employee perceptions - and smaller proportion of low quality jobs, with 65 per cent of all jobs rated good. In Italy only 54 per cent are rated good, with 50 per cent in France and 49 per cent in Germany.
Findings showed that a large majority (84 per cent) of UK employees say they are satisfied with their working hours, with 77 per cent agreeing they are satisfied with their work-life balance, while satisfaction averages among EU 28 countries are lower at 80 per cent and 74 per cent respectively.
“The idea that German, French and Italian workers are more content at work than their UK counterparts is not strongly supported by the evidence, despite the benefit of stronger legal rights and collective protections that the former enjoy," the report said.
The research acknowledges the UK’s low productivity in comparison to other OECD countries but it showed little association between labour market regulation and productivity. It said that between 1985 and 2013 relative productivity - compared with the US - fell in countries with light regulation like the UK. However, it also fell in Italy, which has a more highly regulated economy, while it rose slightly in France and Germany where there is more employment regulation, suggesting the link is not clear-cut.
The UK also ranks worryingly high for its large share of low-paid jobs – defined as earnings that are two thirds average earnings of full-time employees – and it has a poor youth employment rate putting it in the bottom quartile of the EU 28.
Ben Willmott, head of public policy at the CIPD, said: “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. Our report shows that more or less regulation is not the issue.
“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.”
Willmott said the solution lies in “a fundamental review of the UK’s skills policy” to better understand how the UK can generate more high-skilled jobs and better progression routes for those in low-skilled and low-paid roles.
He added: “We also need a much greater focus on improving workplace practices in the areas of leadership, management and HR capability to increase demand among employers to invest in workforce development.”
