Ministers are considering scrapping the EU Working Time Directive. The news has been met with predictable howls from the usual suspects. This is the ‘health and safety’ law which limits most people’s working hours to 48 hours a week on average, including overtime. It has long been unpopular with employers, who warn it stifles productivity by preventing people from working longer hours. It has also been blamed for NHS waiting times.
Vested interests, regulators and HR managers benefit from regulatory complexity, and are remarkably effective at snuffing out attempts to reduce it
Despite this, following reports it might be ditched, one frenzied SNP MP responded that ‘it feels there is no basic human right that is not under threat from this Tory government’. Unison chief Christina McAnea tweeted that it was ‘ripping up’ worker protections. Paul Nowak, the new TUC leader, trotted out the same old line on Tory ideologues not caring about workers’ rights.
This is all nonsense. For a start, recent governments have tightened labour laws, not loosened them. It was always a myth of the Brexit debate that most regulations came from Brussels. Thousands are homegrown. The EU didn’t impose a minimum wage any more than it mandated that thousands of British jobs should require an occupational licence. It was the UK that led the way in gender pay gap reporting and ruled that Uber drivers be treated as traditional employees.
And even when the laws were created by our former EU overlords, we went ahead and gold-plated them. The EU minimum level for annual leave is 20 days. In Britain, we have 28 days of paid holiday. The EU minimum for maternity is 14 weeks’ paid leave. Here, it’s 52 weeks of leave, 39 of which are paid.
The regulatory burden takes on a new significance when the government is hiking taxes to 70-year highs. Corporate taxes in Britain will soon be 10 percentage points higher than those in Ireland. If you’re an online marketplace, you now have to pay a Digital Services Tax. If you’re a bricks-and-mortar business, you pay punitive business rates. If you’re an employer, you make National Insurance contributions. Your day-to-day operations will involve VAT, and possibly Vehicle Excise Duty or the Apprenticeship Levy. Sell up, and you’ll pay Capital Gains Tax.
Churchill famously said ‘for a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle’. The Treasury seems to believe it has no other option but to tug on the handle with all its might.
The government is constantly under pressure for more red tape. Unions and Labour MPs have pushed for a four-day working week. The Tories have granted the right to request flexible working from day one of a new job, leaving employers with little choice but to permit home-based job shares from the get-go, for fear of the employment tribunal. Vested interests, regulators and HR managers benefit from regulatory complexity, and are remarkably effective at snuffing out attempts to reduce it.
As a result, red tape permeates all aspects of employment. Politicians ignore the costs and the perverse downsides – like how anti-discrimination laws can lead to falling job opportunities for protected groups or how protection laws lead to more temporary contracts – because the benefits are often obvious, direct and likely to elicit favourable headlines.
But perhaps the tide is beginning to turn. The Department for Business and Trade believes that reforming the Working Time Directive could save companies more than £1 billion a year. Perhaps people will begin to realise that these laws come at a cost, one that economists nearly all agree is ultimately paid not by the businesses, but by consumers (in the form of higher prices) and employees (through lower wages). The £1 billion saving might initially go to business profits, but gradually competition would mean it is passed on to consumers and workers.
Cutting red tape doesn’t only benefit capitalists. Competition is the best regulation. But it’ll take a bold politician to make these arguments in the current climate, and an even bolder one to stick to them.
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