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A no to deregulation? And at what price?

A & lsquo;no’ to deregulation? And at what price?

Nearly two years into the job, in a Guardian interview Vince Cable expressed his scepticism that business deregulation is the solution to the country’s economic stagnation. This after the red tape challenge has promised much but so far delivered little.

It appears that the Secretary of State for Business was inflamed by the upcoming consultation on labour market reform. Elsewhere in the interview Mr Cable was eager to highlight the inherent flexibility in the UK work force.

Cable may have valid cause for concern however, in endeavouring to improve the position of workers, disproportionate and ineffective regulations could be safeguarded simply because they provide workers with rights.

One example of this is borne out in a Financial Times report on regulation in the recruitment sector (11/03/2012), which Adrian Marlowe, chairman of the Association of Recruitment Consultancies (ARC), hails as “the latest evidence of business regulations which are damaging, not only to small businesses, but also the very workers they are expressly designed to protect.”  

The administrative burden of the Agency Workers Regulations has reportedly been a significant factor in smaller recruitment companies seeking a buyer or else closing altogether.  Larger companies are expanding at the expense of smaller businesses, the loss of recruiters’ jobs and a reduction in diversity, thus limiting flexibility. 

Another point made by the FT article is that smaller recruitment companies would be less likely to afford to make use of the Swedish Derogation – an “increasingly popular way to deal with the regulation.” Although this option does afford employment rights, it does not provide full job security to the worker, nor entitle the worker to equal pay. Marlowe continued "At the same time sources point to clear evidence that other agency workers are losing their work. A reasonable conclusion can only be that the regulations reduce flexibility and do not strike the right balance.”

“Like the driver of a car who sees the oil pressure dropping, the best thing to do is stop quickly. A more rapid, proactive and holistic approach by the government to the Agency Workers Regulations would be welcome.”


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