Memorandum submitted by the TUC
INTRODUCTION
1.1 The TUC represents 59 affiliated unions
with a total of nearly 6.5 million members. Members of TUC affiliated
unions are employed in a wide variety of industries, sectors and
occupations. The TUC welcomes the commitment of the Government
to better regulation. Trade unions are essentially organisations
that regulate relations between employees and employers, largely
on a voluntary basis. We believe that while it is essential to
have in place a floor of statutory employment protection measures,
as far as possible statutory regulation should be kept out of
employment relations.
1.2 The TUC welcomes the opportunity to
submit evidence to this inquiry. Our submission focuses on the
workplace, as that is where we operate. Nonetheless our members
are also consumers, tax payers and users of the NHS and local
authority services, so we have a general interest in how regulation
is applied, how it evolves and why it is there. We have been represented
on the Government's former Better Regulation Commission and are
represented on the new Regulation and Risk Advisory Council. We
engage regularly with the Better Regulation Executive.
1.3 The TUC believes that the debate about
employment regulation should take into account the positive advantages
of employment rights. Employment rights help labour markets to
operate more effectively by creating security, reducing poverty,
inequality and social exclusion, and promoting the long-term trust
relationships that are essential if the UK is to succeed in internationally
competitive markets.
1.4 In this submission we look first at
the impact of the better regulation agenda, then at the work of
the Better Regulation Executive.
THE IMPACT
OF THE
BETTER REGULATION
AGENDA
2.1 It is difficult to assess the impact
of the Better Regulation agenda to date as reforms take some time
to have an impact and much of what has been done is still only
in the early stages of application. There has been a big emphasis
on burdens on business, not only in terms of employment and health
and safety regulation but also in terms of other areas of regulation,
for example in relation to the environment, and consumers. There
is a danger that that the Government is viewing the impact too
much in terms of whether or not the business community is satisfied.
While business is an important constituency there are other important
constituencies that are affected by regulation. The TUC has also
been concerned that insufficient attention is paid to the benefits
of regulation, both to businesses and to other communities.
2.2 We have concerns about the methods used
by the BRE to assess the impact of regulation, which seems to
be using the crude measure of quantity, rather than looking at
how the regulation is actually working. Focussing on quantity
is likely to encourage departments to excise regulation that is
voluminous or old, rather than regulation that is ineffective.
Some regulation may be voluminous but effective, other regulation
may be old but still fit for purpose. Less regulation may make
life more simple for regulators, producers and providers but may
expose the regulated to greater harm.
2.3 We are also concerned about a growing
habit of viewing employment rights only as a constraint on employers.
Industrial and social relations are seen as a zero-sum game, in
which any advance for those at the bottom must mean losses for
those at the top.
2.4 The laws, institutions and practices
that make up employment regulation do more than simply affect
the degree of labour market flexibility in the economy. They were
introduced to achieve positive social and economic objectives,
which are valuable in themselves, and the extent to which these
objectives are achieved should be included in any assessment.
As Robert Solow commented in his Keynes lecture:
"Every one of these regulations or restrictions
was intended to promote a desirable social purpose. Some may do
so ineffectively or inefficiently. That is worth knowing; but
the fact remains that wholesale elimination of these `rigidities'
is neither desirable nor feasible".1
2.5 Some politicians and economists bitterly
opposed the national minimum wage, because it would reduce wage
flexibility; it would, we were told, increase unemployment and
inflation. In fact, price rises in 1999 (the year the minimum
wage was introduced) were lower than in the previous year.
Employment rose by 250,000 in that year, and it has continued
to rise alongside the minimum wage. 18% of firms affected by the
2001 increase responded by increasing their use of new technology,
and the minimum wage has also been responsible for modest increases
in training and improvements in retention and motivation in the
low-paying sectors.2
2.6 The national minimum wage has made life
better for many low paid workers. 1.2 million received a pay increase,
with black and minority ethnic workers and disabled people gaining
disproportionately;3 and over a million people have gained from
each subsequent increase.4 The national minimum wage has reduced
the gender pay gap by about 1.5%.
2.7 It is just as misleading to consider
the rights introduced by the Working Time Directive only in terms
of reduced flexibility. These rights enhance the efficiency of
firms and the country as a whole, through improved health and
safety—excessive hours are linked to the likelihood of having
a road or industrial accident or of over-exposure to dangerous
chemicals and to such conditions as cardiovascular disease, diabetes,
stress and depression.5 There is also evidence that the long hours
culture restricts women's progress in the labour market, harms
parenting and undermines family life and is linked to low productivity,
high labour turnover and failure to innovate.6 We know that, despite
the severe limitations resulting from the opt-out, the Working
Time Regulations 1998 led to 6 million people getting an increase
in their holiday entitlement, including 2 million who had previously
had no holidays at all. This is a large increase in the total
of human happiness, and it is shocking that many politicians and
commentators pay it no attention at all.
2.8 We need these rights to have the force
of law because there are far too many employers who will do nothing,
even when better conditions would be in their interests, helping
them to maximise the contribution their workforce can make to
the organisation. The Working in Britain Survey found that "managers
are pragmatic enough to adapt to change in the way they treat
their employees when it is required of them but few seem willing
to take any positive initiative to introduce workplace reform
to meet worker demands or aspirations".7 The survey was carried
out when the Government was considering the right to work family
friendly hours, a debate that took place after several years of
exhortation and advice; the survey found "precious few signs
that most employers in Britain are planning in the near future
to improve benefits for employees with specific family responsibilities
beyond the bare legal requirement".8
2.9 Getting rid of employment legislation
would not make the problems it addresses go away. Remove rights
and workers will try to defend themselves through their unions.
Weaken the unions and they will turn to the courts. Businesses
hate the "compensation culture" that has long been a
feature of US employment, where unions have been weak and regulation
set at a low level for many years. Its rise in this country has
precisely mapped the move to deregulation and attacks on unions.
2.10 These examples, which relate to employment
regulation but may be equally applicable elsewhere, are included
to demonstrate the complexities of impact assessment. It is not
necessarily going to be the case that reducing the volume of regulation
is going to have any real benefits to the economy, to society
and indeed in the longer term to businesses.
2.11 The TUC supports the principle of better
regulation—it is not in the interests of employees to have
cumbersome, impenetrable, unnecessary or outdated regulation applied
to them. Nonetheless we do have concerns about an observed tendency
among some lobby groups to conflate the mechanisms of regulation
with the policy objectives that the regulation is intended to
deliver. For example, some employers' organisations have criticised
the recent extension of maternity rights as being a burden on
business. In fact they are no more a burden in administrative
terms than the unextended regulations were: the real objection
was to the policy decision to extend the period of paid maternity
leave. There is a legitimate argument for simplifying maternity
regulations but it should not be used as a proxy for reducing
the entitlement of mothers to paid time off. It is, of course,
legitimate for business organisations to argue for policy change
but it is disingenuous to disguise this as concern about administrative
difficulties. The failure to distinguish between policy and administrative
problems has in some cases started to seep into Government decision
making about regulatory reform. This will, in the long run, not
help the cause of better regulation. It may also affect the way
in which the Government assesses the impact of the better regulation
agenda.
THE BETTER
REGULATION EXECUTIVE
3.1 The TUC supports the role of the Better
Regulation Executive (BRE); it is important that there is a part
of the Government specifically charged with checking existing
and proposed regulation to ensure that it meets the principles
of good regulation. The designation of officials in every department
to take responsibility for better regulation and work with the
BRE should assist with delivery of better regulation in a consistent
way. It will also ensure that within that general consistency
there is room for appropriate variation to suit the particular
circumstances of what that department is regulating.
3.2 Our own experience of better regulation
has been in the employment area, including health and safety.
We have submitted evidence to various recent Government consultation
exercises, including the Hampton Review and the McCrory review
of penalties. Copies of TUC responses can be provided to the Committee
on request.
3.3 We had some concerns about the re-location
of the BRE from the Cabinet Office to the DBERR in the summer
of 2007. Our concern was that if the BRE were to be in the department
for "Business and Enterprise" its main focus would be
the regulation of business. Whereas there is a need to ensure
good regulation of business it should not displace efforts to
achieve good regulation across government. It is perhaps too early
to judge whether or not the move has had this effect.
3.4 The TUC commends the BRE for their active
willingness to engage with stakeholders including the TUC and
hopes that the BRE will continue to engage with a wide range of
stakeholders and not just those associated with business. This
should help them to withstand any political pressures on them
to help the Government to deal with particularly vociferous single
interest groups.
3.5 There are two areas of particular interest
to the TUC in terms of what the BRE does. The first of these is
how they measurement impact. Our concerns about the measurement
of benefits were outlined earlier in this response. Our particular
concern about the BRE's approach to measuring the impact of employment
regulation is an apparent tendency to accept the "evidence"
presented by some employers' organisations without seriously questioning
the validity of the evidence.
3.6 For example, the British Chambers of
Commerce (BCC) produces a Burdens Barometer, which assumes huge
costs, for example, associated with the adjustment provisions
in the Disability Discrimination Act. This is not a matter of
"red tape"—it is a cost that results from enabling
disabled people to work. Presumably the BCC does not object to
the policy objective of enabling disabled people to work; there
is a legitimate argument about whether or not the State should
provide financial assistance to SMEs in making adjustments to
allow disabled people to work but that is not a matter of "red
tape", nor, for that matter, is it a cumulative "burden".
(As a tempting aside, barometers measure atmospheric pressure
on an immediate basis not a cumulative basis—otherwise they
would be of no use whatsoever as indicators of the atmospheric
pressure at any one time).
3.7 The second area of interest to the TUC
is the assessment of how regulation is being enforced. There is
clearly a link between the quality of regulation and its enforcement.
If regulation is badly drafted, or ill-conceived it will be difficult
to enforce. This will defeat the policy objective in two ways.
Firstly, it will be hard to ensure that bad or illegal practices
are effectively dealt with and secondly it is probable that some
producers or providers will ignore them altogether, sometimes
with the tacit collaboration of regulators.
3.8 The BRE should monitor and evaluate
enforcement of regulations. This could be done partly by ensuring
that departments and agencies do it routinely, and also by picking
out sets of regulations either randomly or where real evidence
of difficulty is produced and investigate how enforcement is working
and whether the regulations are delivering the desired policy
objective.
CONCLUSION
4.1 The TUC is grateful for the opportunity
to submit evidence and looks forward to meeting the Committee
on 29 April.
REFERENCES
1 "What is Labour-Market Flexibility? What
is it Good For?", Robert M Solow, Proceedings of the British
Academy, Dec 1998, pp 189-211.
2 The National Minimum Wage, Low Pay Commission,
4th report, 2003, pp 61, 231 & 236.
3 Ibid, para 2.16.
4 Ibid, para 2.20.
5 The Use and Abuse of the "Opt-Out"
in the UK, TUC, 2003, quoting: The use and necessity of
Article 18.1(b)(i) of the Working Time Directive in the United
Kingdom, Barnard et al, EC, 2003; Working Long Hours,
HSE, 2002; "Married to the Job", Occupational Health
and Safety, July 2001; Working Long Hours: A review of
the evidence, Kodz et al, DTI Employment Relations Research
Series 16, 2003; Living to Work Survey, CIPD, 2003; Reducing
at-work road traffic incidents, Work-Related Road Safety Task
Group, HSE/DTLGR, 2001; "Working Long Hours and Health",
J M Harrington, BMJ Supplement, Vol 308, 1994. TUC analysis
of the 2002 Labour Force Survey looking at hours of work and rate
of industrial injuries, found a consistent gradient, with people
working under 16 hours a week having an accident rate per hundred
workers of 1.5, while those who worked more than 60 had a rate
of 4.9.
6 Ibid, quoting: Barnard et al; Parenting
in the 1990s, Ferri and Smith, JRF, 1996; Step-parenting
in the 1990s, Ferri and Smith, JRF, 1998; How do they find
the time?; Dex et al, JRF, 2003; The Business Context of
Long hours Working, Hogarth et al, DTI Employment Relations
Series 23, 2003.
7 Taylor, Managing Workplace Change, ESRC,
2002.
8 Op cit.
April 2008
| 
