Trade union calls for new redundancy protections must be ignored, says new IoD report

Dated: 23 February 2009

The Institute of Directors (IoD) says that the claim made today by the Trade Unions – that the UK’s labour market is too flexible because of “weak” employment laws and there should be new redundancy protections – is complete nonsense. Due to a mass of new regulation over the last 12 years the UK labour’s market is nowhere near as flexible as it should be, let alone too flexible.

In a new analysis published in this month’s Big Picture journal the IoD refutes the Government’s constantly repeated claim that the UK has the most flexible labour market in Europe – evidence drawn from a major European labour force survey suggests that Denmark and Ireland now have more flexible labour markets than the UK, with the UK gradually moving towards the rigid model found in countries like France and Italy.

The analysis reveals that the loss of labour market competitiveness in relation to other EU countries has been caused primarily by new employment regulation introduced by the current Government – 35 major employment regulations since 1997. Flexibility has also been undermined in the UK, and in Europe more generally, by excessive EU labour market regulation – there have been 19 EU employment Directives since 1997.

Trade Union calls for yet more employment regulation would be the road to disaster and must be ignored by the Government. Companies shed labour because they need to reduce their cost base. Preventing them from reducing their payroll costs now will only worsen the corporate sector’s deficit. A larger corporate deficit in turn risks an even greater peak in future unemployment.

Commenting on the Trade Union calls, Alistair Tebbit, IoD’s head of employment policy, said:

“The idea that the UK has weak employment laws is a complete fallacy. Since 1997 we’ve had over 50 major employment regulations. Many of these have undermined the UK’s competitiveness with the effect that the UK no longer has the most flexible labour market in Europe.”

“Calls from the Trade Unions that we need more redundancy protections are extremely dangerous and not in the interests of British workers. Companies shed labour because they need to reduce their cost base. Preventing firms from reducing their payroll costs will only increase corporate sector debt and lead to even greater unemployment levels later on.”

ENDS

Contact Points

Edwin Morgan
Media Relations Manager
Institute of Directors, 116 Pall Mall, London SW1Y 5ED
Tel: +44 (0)20 7451 3392
Mob: +44 (0)7814 386 243
Email: edwin.morgan@iod.com
Website: www.iod.com/policy

Notes to editors

  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 38,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
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