Director General, British Chambers of Commerce
Last year, Brendan and I debated the effect of regulation on the labour market and on the economy in general. I argued that costly, constantly changing employment regulation was a barrier to growth and job creation that UK PLC could no longer afford. This Government introduced the one-in-one-out rule. Business was told that no new regulations would be brought in unless another one was removed to offset the burden. Yet the laws and the changes keep on coming.
According to the Government, both the extension of the right to request flexible working and changes to parental leave will have a net cost on business. The number of formal flexible working requests will increase by 290,000. Shared parental leave will increase the net amount of time parents can take off by four weeks, along with the administrative costs to firms. Are these really growth policies? Is this what the Government means when it says growth will be at the heart of its initiatives?
Businesses tell me that they can get on with creating private sector jobs if the Government creates the right environment. This must be a priority. More laws and more change only increases the risk to firms of a vexatious claim in front of an employment tribunal. Even when a firm wins a case they lose – the average cost for an employer to defend a claim is £2,500.
Business will continue to operate flexibly, where possible, without the Government’s regulatory interventions. These changes should be shelved, and the focus be put back on policies to generate growth which will in turn help power our economic recovery.
General Secretary, TUC
David Frost asks whether plans to increase shared parental leave and extend the right to request to work flexibly are really policies for growth. At a time when government growth strategies seem to be thin on the ground, the answer is an unequivocal and resounding “yes”.
There seems to be an underlying presumption that a measure which benefits the workforce must be to the detriment of the business. Yet this simply does not tally with the facts. The facts are that flexibility and shared parenting are good for parents, good for children, and good for business and the wider economy.
David’s own organisation, the BCC has itself reported that 58% of employers noted an improvement in productivity thanks to flexible working and 70% of respondents to its survey noted improvements in employee relations as a result of offering flexible working.
David argues that the right to request flexible working and changes to parental leave will have a net cost to business. But the Government’s impact assessment shows that moving to a universal right to request will result in net benefits for business as it will lead to reduced turnover, increased productivity, and reduced absenteeism. And, on shared parental leave, the wider economic benefits are overlooked.
From 1996 onwards there was a significant rise in the proportion of mothers in work. This happened over a period in which family-friendly rights were substantially expanded and improved. Better maternity leave and pay led to more women returning to work according to a BIS evaluation of these changes. Moving towards a system of shared parental leave and supporting more equal parenting roles will help address the motherhood penalty and reduce the waste which results from women working below their potential on the “mummy track”.
It is true that shared parental leave will increase the net amount of time parents could take off. A month of leave will be created just for fathers. The sad fact is though that few families will be able to afford to take this leave because it’ll be paid at such a low flat-rate. At maximum, the Government expects 13% of new dads to take the reserved month and only 4% are expected to take any other parental leave.
But things are moving in the right direction. Maintaining the status quo cannot be good for families and cannot be good for business. Without taking active steps to encourage more fathers to take parental leave, the outdated views of Sir Alan Sugar, Godfrey Bloom MEP, and Glencore chairman, Simon Murray, will persist unchallenged.