Britain Deregulating to Stimulate Job Growth

The Liberal-Conservative Government’s announced labor market reforms are a step in the right direction and will likely boost employment.

The Liberal-Conservative government in Britain is making it easier for businesses to hire and fire workers as part of a labor market overhaul that is designed to boost employment and with it, the country’s economic recovery.

Compared to the rest of Europe, Britain’s labor regulations are relatively flexible. Dismissing an employee is not especially burdensome but the coalition would make it possible for firms to fire people without the risk of being sued — at least during their first two years of employment. Making it easier to fire workers makes it easier to hire them too.

For small- and medium-sized enterprises especially, having to go through an employment tribunal before laying people off is a costly and time consuming business. It forces them to think twice before hiring which, at times of economic uncertainty, prolongs the rate of unemployment for an unnecessary amount of time.

Currently an employee in Britain can bring an unfair dismissal claim to tribunal after only a year. In order to reduce the number of people who do, workers will face a fee when lodging an employment tribunal claim. Prime Minister David Cameron’s governments also wants to exclude small businesses from the more stringent of labor laws. The length of time that firms have to pay workers statutory sick pay is set to be reduced.

These reforms are steps in the right direction and will likely boost employment once enacted. By maintaining a time limit during which workers can sue their employers in special tribunals however, the country does run the risk of businesses laying people off right before the two year mark — especially while it remains mired in recession.

Ultimately Britons should come to realize that there is no such thing as job security. Government moreover should not encourage that mindset with special laws and regulations that only undermine employment rates.