From the TUC

Deregulation is not dead – But it should be

08 Jul 2010, by Guest in Working Life

Brendan will be debating the future of employment regulation against the BCC’s David Frost at a lunchtime event on July 15. You can read a response from David Frost here, or come to the debate itself by registering online at

Over the last few decades the business lobby has never been slow to tell us that red tape destroys jobs. And by red tape they often mean decent rights for people at work. Before the introduction of the minimum wage and other rights, we were warned of rising unemployment and a reduction in job creation. But doomsday never came to pass – instead the UK experienced its longest period of growth for decades.

What brought that growth to an end was the biggest downturn in the world economy since the 1920s. Businesses have gone bust. Working people throughout the world have lost their jobs. Public services face deep cuts as countries struggle with the holes in their finances caused by the recession.

None of this was caused by excess regulation, but rather by its lack in the financial sector. Decades of business campaigns to set markets free, lift burdens on employers and cut red tape came back to bite their advocates. As unregulated financial markets ran riot, countries across the world felt the full force of the economic storm.

Now should be a time for reflection and rethinking. The economic model of the last decades has failed. The search should be on for a new approach – one where markets serve society, rather than one where society is subordinated to market imperatives. De-regulation is not dead – but it should be.

But the siren voices have returned. Already we are being told that we need to take more of the medicine that nearly killed us – business has resumed its anti-red tape crusade. But the evidence to support their case doesn’t stand up to scrutiny. The domestic and international evidence shows us that there is significant relationship between the level of employment protection legislation and labour market outcomes – some highly regulated countries do well, other lightly regulated countries do badly. Regulation simply isn’t the determinant of labour market performance that the business lobby would have us believe.

In fact the relationship between unemployment and regulation lies in the nature, not the level, of regulation. There is no one-size fits all model for economic success. Anglo-Saxon de-regulated labour markets with light touch employment protection do well on employment outcomes, as do Scandinavian flexicurity models with strong collective bargaining, high levels of employment protection and generous welfare benefits. But the flexicurity models score even more highly on stability – compared to the economic turbulence that the UK and US economies have seen over recent decades and particularly during the recent recession. Flexicurity economies are also fairer – they have lower earnings inequality and much lower levels of poverty. They show that it is possible to achieve both economic success and social justice.

The UK’s economic situation remains precarious – hundreds of thousands have already paid for the banking crisis with their jobs and recent indicators suggest that at best current policies are leading us towards a period of economic stagnation. De-regulating now would be a disaster – the UK needs a new sustainable strategy for growth, and a fairer economy that is less vulnerable to the economic volatility of recent times. Good regulation will be essential to a strong economic future.

DEBATE: Read a BCC response to this post.

Brendan will be debating the future of employment regulation against the BCC’s David Frost at a live lunchtime event on July 15.

You can read a response from the BCC here, and come to the debate itself by registering online at

One Response to Deregulation is not dead – But it should be

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