Tag Archives: Flexible labour markets

Standard

Posted by

Posted on

May 21, 2015

Posted under

News

Comments

Leave a comment

CBI minions of the world unite, you have nothing to lose but your credibility!

If a week was once a long time in politics, it’s now no time at all when it comes to thinking up new legislation. For a week was all it took for renowned Star Trek fan Sajid Javid, newly promoted from culture to business secretary, to master his brief and decide that what Britain really needs right now is another small business and enterprise Bill. Not just any old small business and enterprise Bill, mind, but an “ambitious” small business and enterprise Bill. And this less than two months after the last small business and enterprise Bill – which clearly wasn’t anywhere near ambitious enough – reached the Statute Book.

According to Tuesday’s BIS press release, the Starship Enterprise Bill will:

“Help make Britain the best place in Europe to start and grow a business, and help create two million jobs over the next five years, so that more people have the security of a regular pay-packet. Unless, of course, they are employed on a zero-hours contract. Ha ha ha, beam me up Scottie.”

Yes, I made that last bit up. But the Bill really will “cut red tape for business by at least £10 billion over the next five years” and “create a Small Business Conciliation Service to help resolve disputes [especially over late payment]” – these being pledges in the Conservative Party Manifesto 2015.

Fortunately for Mr Javid, he didn’t have to spend any of his first week in 1 Victoria Street working out exactly how the Bill will cut £10bn worth of red tape for business. No, that’s not how policy-making works these days. Mr Javid left it to junior BIS minister Anna Soubry to explain:

“This will be a no nonsense Bill [unlike the last one!] to back small businesses and help create jobs, giving financial security and economic peace of mind to hard-working people across the country. We will be asking businesses for evidence in the coming weeks and months. We want them to be our partners in identifying and scrapping needless burdens at home and in Europe.”

Yes, that’s how evidence-based policy-making works these days. You – the one-week-old cabinet minister – decide to have a Bill, then you hunt around for evidence to justify said Bill. They didn’t tell us this on my MSc in Public Policy, but hey.

To be fair to Mr Javid and his colleagues, a Small Business Conciliation Service doesn’t sound such a bad idea. I just wonder whether there will be fees for small businesses to use the Service. And whether those fees will be anywhere near £1,200. That would only be right and proper, after all. Why should hard-working taxpayers have to bear all of the cost?

As for how to cut that £10bn of red tape, I imagine Ms Soubry’s inbox is already filling up with lengthy emails from Sir Michael Rake and his numerous minions at the CBI. Because, on Wednesday, while being skewered by Sarah Montague on the BBC Radio 4 Today programme (start at 2:34:55), Sir Michael blustered that we desperately need to cut Red Tape because “where [employment] rights are so extensive it leads to employers not being willing to employ people, that is not helpful to anyone”. And who could argue with that?

Later that morning, I tweeted the CBI to ask them which employment rights, exactly, are currently “leading to employers not being willing to employ people”. And also to ask them to explain what it is that causes the “inflexibility in being able to adjust your workforce to changing circumstances quickly enough” that, apparently, so concerns Sir Michael. Needless to say, I didn’t get any response, but it seems reasonable to assume that it’s not the statutory right to four weeks’ paid holiday that Sir Michael has in mind. Could it be the legal right not to be subject to unfair dismissal?

Well, I guess it could be. But, if you are an employer, and minded to employ one or more extra members of staff, you will know (unless you are a complete idiot, in which case you probably shouldn’t be an employer) that you have no less than two years to decide whether you’ve made the right decision, before those employees qualify for legal protection against unfair dismissal. That is, you can get rid of them as quickly and as unfairly as you like, as long as you do it within two years of hiring them. And, even if you decide that you made the right decision in hiring them, but circumstances somehow change for the worse after two years, you can still dismiss them (or make them redundant). You just can’t do so without following a fair procedure. And how hard can that be for titans of industry with their gene-based, wealth-creator superbrains?

Even if you’re a regular, non-superbrained oik who somehow made it to being CEO of a wealth-creating company, it wouldn’t take you (or your unpaid intern) long to discover that, these days, the risk of facing an employment tribunal claim for unfair dismissal, however badly you treat your human capital units, is … well, negligible. Since the introduction of upfront tribunal fees of £1,200 in July 2013, and the introduction of Acas early conciliation in April 2014, the number of unfair dismissal claims has fallen by two-thirds, to fewer than 13,000 per year.

UD

Yep, that’s fewer than 13,000 unfair dismissal claims per year, from a workforce of some 26 million. Put another way, each of the UK’s 1.2 million employers now faces an unfair dismissal claim – maybe well-founded, maybe not – about once every century, on average. But, according to the superbrained, wealth-creating Sir Michael Rake, that is still far too often for our entrepreneurial classes to cope with. So we must cut Red Tape now! Over to you, Sajid.

Copyright Steve Bell 2015/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664

Copyright Steve Bell 2015/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664

[Many thanks to the great Steve Bell for granting me permission to use this image.]

.

Standard

Posted by

Posted on

May 21, 2014

Posted under

News

Comments

Leave a comment

Is it possible to have a Business Secretary that is too flexible?

Last week, Vince Cable grabbed a few headlines with a notably insightful speech about labour market flexibility. In what looked suspiciously like a significant attempt to differentiate Cable’s Liberal Democrats from their Coalition partners, the Business Secretary quickly got to his point by posing an interesting set of questions:

“Is it possible to have labour markets that are too flexible? Are we in that position now in the UK? If so, how do we maintain the advantages of flexibility – for workers and firms – while reducing the costs?”

As is often the way with politicians, Cable had some ready answers to his own questions. Noting that, due to welfare reform and other Coalition policies, “the incentives to work, particularly in low skilled jobs, have never been sharper”, he suggested that “we need to ensure is that this doesn’t produce an entrenchment of low pay, low productivity jobs”.

Now, this may be the right time for me to advance my theory that Cable actually wrote this speech in 2010, but was never allowed to deliver it. So the speech languished at the bottom of his filing cabinet until last week, when he dusted it down and sneaked off to the Resolution Foundation without telling Dave, Nick or George. Had he delivered it in 2010, the speech might have enhanced his reputation as an avant-garde thinker on economic issues. Now, it just sounds rather too much like the rusty hinges of a dilapidated stable door swinging shut, several years after the horse has bolted.

Whatever, Cable had a number of specific ideas on how to prevent the entrenchment of low pay, low productivity jobs. You know, the entrenchment that hasn’t yet happened.

The most headline-grabbing of these was the suggestion that workers on a zero-hours contract should have a “right to request a fixed-hours contract, building on the model we already have for flexible working”. This is so left-field that I can’t decide whether it’s a stroke of brilliance or just plain daft. Perhaps some kindly #ukemplaw person could put me right on this.

Rather more mundanely, Cable suggested that, alongside “encouraging companies to invest in training their workforces”, the government should be ensuring “a strong structure to protect the minimum wage and strengthen [its] enforcement”.

Now it just so happens that Cable is the government minister in charge of protecting the minimum wage and strengthening its enforcement. So this is one area where he could really crack on with preventing the entrenchment of low pay, low productivity jobs.

And, to his credit, Cable has recently (if somewhat belatedly) increased the financial penalties for non-compliance. Furthermore, not only has the HMRC minimum wage enforcement division escaped the worst of the Coalition’s austerity cuts, but at 180 the number of NMW enforcement staff is actually some 20 per cent higher than when Labour left office in 2010 (though the number of compliance officers is much the same).

On the other hand, since Cable and his Coalition colleagues took office in 2010, not one employer has been prosecuted for criminal non-compliance with the minimum wage. And, since Cable introduced a process for ‘naming & shaming’ employers found by HMRC to have flouted the minimum wage in early 2011, just six employers have been so ‘named & shamed’ by Cable’s Department for Business, Innovation & Skills (BIS).

As recently as October last year, that ‘naming & shaming’ scheme was revamped, with Cable’s then junior minister, Jo Swinson, boldly asserting that the new, streamlined process would “give a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don’t pay the minimum wage”.

However, since that ministerial fanfare, just five (small) employers have been ‘named & shamed’ by BIS. Yet HMRC tell me (in response to a FoI request) that about 270 employers were issued with a Notice of Underpayment – the trigger for ‘naming & shaming’ under the revamped process – between 1 October and 28 February. Even allowing for the appeal process that Cable has indicated takes “roughly 150 days”, with the end of May approaching it is deeply puzzling why fewer than two per cent of those 270 “minimum wage rogues” have so far been ‘named & shamed’ by Cable’s department.

Has the process of ‘naming & shaming’ employers proved more difficult than Cable and Swinson envisaged? Or is their department simply being too flexible when it comes to tackling the entrenchment of low pay jobs?

Update (8 June): BIS has today named & shamed a further 25 (small) employers. But this still means that only 30 of the 270 minimum wage rogues caught by HMRC between 1 October and 28 February have been named & shamed under the new scheme. What about the other 240? How many have successfully appealed against being named & shamed? We really should be told. As the Independent notes, the 25 small employers named & shamed this week between them accounted for just £43,000, or less than one per cent, of the more than £4.6 million in underpayments identified by HMRC in 2013/14. And not one of the 25 firms will have paid anywhere near the current maximum penalty of £20,000, let alone the proposed new maximum of £20,000 per underpaid worker that Vince Cable seems to think is needed.

Update (16 June): Brilliant detective work by Michael Reed of the Free Representation Unit has uncovered the surprising fact that at least three of the 25 businesses named & shamed by BIS on 8 June were dissolved several years ago, in one case as long ago as 2009. Is BIS padding out its lists of those named & shamed with some ancient cases from the HMRC archives?