Monday, 15 October 2012

Employment rights and economic growth

David Blanchflower in the Independent uses these data from the OECD to make the point that further reducing employee rights is hardly likely to improve the UK's economic performance, given that our light touch is second only to that of the USA. America's own economic performance and rate of re-employment after the 2008 crash are hardly exemplary. The same could be said about Hungary and Ireland, also below the OECD average.

(click on the graphic for a better view)
Four of the six most regulated countries - Portugal, Spain, Greece and France - are among the least favoured by the ratings agencies. A large part of the economic woes of Greece and Spain is due to the failure to collect tax due. The "black" economy of Spain and Portugal is said to comprise between 20 - 25% of activity. There is much grumbling in France about the costs of employing people and threats to move businesses to England. That all seems to back up the theory that less regulation would encourage more work "on the books".

However, equal top of the employee protection league is Turkey, whose economy is thriving - so much so, that the UK continues to support her case for entry to the EU. Germany, Norway and Sweden too have more employment protection in place than the OECD average.

It seems to me that not only does employment protection legislation not harm the national economy, but that it may also dampen the effects of external shocks, such as the 2008 credit failure. More important is a cohesive and respected revenue system.

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