The Beecroft report: flexibility, but for whose sake?

May 24, 2012 by
Filed under: Enterprise, Social Economy 

Last week I blogged about the need to take a more qualitative perspective on jobs overly a purely quantitative one. The argument I made was that too often we take it as read that all employment is good employment. As such we paper over the widening cracks of today’s labour market: declining levels of wage growth, the rise of zero-hour job contracts and the dominance of part-time vacancies over full-time ones, among others. These aren’t new trends as such, but it is striking how little debate there is about them and the increasingly dubious nature of the work which is offered to those at the bottom of the pyramid.

Since that post, there have been rumblings in the Coalition over the Beecroft report into the flexbilisation of employment regulation, something leaked to the press and subsequently published on the BIS website this week. The 16 page report includes a number of recommendations, inlcluding that we should reduce the consultation period when a firm has to consider redundancy payments and, most notably, that firms should be allowed to dismiss “anyone without giving a reason provided they make an enhanced leaving payment.” Compensation aside, the report’s message is clear: it should be a simple process to remove employees who are surplus to immediate requirements.

For the reasons noted in my previous blog, the immediate concern with this is that flexbilisation can make life a great deal harder for those on the bottom rungs of the employment ladder. The experience of “zero-hour contracts”, for instance, shows that flexibility is too often abused by firms and employment agencies. In scenes that appear more fitting for the Grapes of Wrath than for modern day Britain, a colleague tells me that friends of his are forced to get up at 6am every morning in the hope of being called in for work, yet though there are no guarantees that it will happen. It is, in short, a workforce left on tenterhooks.

To be sure, Beecroft’s proposals are not actually intended to make life easier for individual workers. Rather they are to boost employment levels in aggregate. Individual security, the argument goes, should be sacrificed for the collective good. As he writes in his report:

While it may seem counter-intuitive, even making it easier to remove underperforming employees will in the short run not increase unemployment as they will be replaced by more competent employees. In the long run it will increase employment by making our businesses more competitive and hence more likely to grow.

Yet I’m not sure how much this blunt drive towards flexbilisation will do any favours for the wider economy or aggregate employment levels either. In a recent blog post, Nick Pearce cites a new piece of research which suggests that once the economy loses jobs, particularly routine blue collar ones, they are invariably hard to get back. The clear lesson to draw from this, he notes, is that “it is vital to prevent redundancies during recessions.” I haven’t seen the full academic article myself, but I can imagine that one of the reasons for this phenomenon is that the loss of skills and confidence that beset those who lose their jobs end up compromising their capacity to return to work at the same level as before.

All of this isn’t to argue that flexibility is a problem per se. Rather it is that the type of no-nonsense de-regulation being championed in the Beecroft report seems ill-thought through. It is also worth noting at this point that we already have some of the lowest regulatory burdens in the world. According to Danny Blanchflower, the UK ranks 3rd best for the impact of regulation and 7th for the ease of doing business.

What is perhaps needed instead, as is argued in Nick’s blog, is a particularly collaborative model of flexibility like that witnessed in Germany and now Sweden. Here, instruments such as ‘short-time working’ arrangements bring workers, employers and trade unions together to agree on the right wage level and the most suitable number of working hours. It is about collective compromise for the benefit of everyone, not a “them and us” scenario where only one party wins out. Workers get to keep their jobs, businesses get to reduce their wage bill through a reduction in hours, and the whole economy benefits from a more robust workforce that have retained their jobs (and therefore their skills and confidence) and who are creating demand-led growth through employee driven spending.


Comments

  • Atif

    Great blog Ben. Beecroft promotes a picture of business that is no longer tenable: growth-obsessed, short-term maximisation, unconcerned with building strong, long-term relationships between employees and employers, ignorant of the need for business to have a social purpose, and reducing employees to little more than a means to short term productivity and profit – rather than seeing them as a long term investment opportunity and a source of untapped potential.  I have friends and family that are on “zero hour contracts”, and if I’m honest it’s tantamount to brazen exploitation. The reason, as you suggest, that British workers aren’t as skilled as counterparts in places like Germany is because of the lack of collaborative relationships between business, workers and trade unions, and the unwillingness of British policymakers to think in the long term.

    I was discussing this with a colleague the other day and he pointed out to me that one of the reasons for the ‘deskilling’ of British workers in certain industries (e.g. construction) and their inevitable replacement by skilled Eastern Europeans is because while the British system has historically been relatively unconcerned with building strong, sustainable worker-employer relationships and skill sets (seen in deregulation and the phenomenon of casual working/zero hour contracts), the former Communist regimes of Eastern Europe actively pursued economic/industrial strategies that built the capacity and skill sets of its workers. Ironically, the same regimes that Eastern Europeans understandably came to deplore were unknowingly crucial to their post-Communist success in Western countries.