Study exposes myths about deregulation and flexibility

The notion that deregulation and weak unions are essential for job creation and low unemployment is a myth, says a new study from The Work Foundation (TWF).

TWF, which undertakes research into a range of labour market issues, also questions the assumption that “being more like America” is essential if high unemployment in some European countries is to be reduced.

Who’s afraid of labour market flexibility argues that a number of European countries — Denmark, Sweden, Austria and the Netherlands — have achieved “comparable or better levels of labour market dynamism to the UK” while at the same time allowing for much greater levels of “workplace justice”.

“The standard view of flexibility is shot through with myths, half-truths and downright manipulation of the evidence,” said David Coats, the report’s author and associate director of policy at TWF.

He added: “In the UK and US, the idea that deregulation equals high employment has been allowed free rein, despite the overwhelming evidence that countries with very different laws and institutions have performed just as well economically, have less wage inequality and a higher quality of working life for their citizens.”

The report calls for a number of reforms to improve working life without damaging job creation or unemployment levels. These include higher compensation for redundancy, an improvement in the level of out-of-work benefits and the development of “sector forums” in low pay, low skill, low productivity industries to improve productivity and increase pay.

A summary of the report is available at www.theworkfoundation.com