The Department for Business, Innovation and Skills has looked at the new laws and found they could cost businesses nearly £2bn a year, as more than a million workers get a range of perks to which they are not currently entitled, after just 12 weeks of employment.
Of course businesses don’t pay for the cost of new regulations – they find ways to pass those costs on. Some will pass the cost to their customers in the form of higher prices. In other cases, shareholders might be hit, meaning that it’s yet another blow to your pension fund. But it would be a fair bet that, just like with corporate taxes, the people who lose the most are workers, who will get lower wages or lose their jobs.
Some temporary workers will be valuable enough to their employer that they will be kept on. But others, particularly the least productive and therefore most vulnerable, won’t be worth employing any more and will risk losing their jobs. The CBI thinks that up to 250,000 temp jobs could be jeopardised.
The Directive will be particularly damaging now because everyone is so uncertain about the economy. With the eurozone in trouble, China clearly experiencing an asset bubble, the stability of the Middle East still uncertain and so many other risks, many employers will be skittish about taking on new permanent employees. If we don’t want people to just sit at home on the dole until those storm clouds on the horizon clear, then we should make it possible to employ them on a flexible basis.
Euro ruse
If this had been a mistake made by British politicians it would still be a bad regulation, but at least we would be able to vote someone else in and get rid of it. But the Agency Workers Directive was imposed on the UK by other countries which don’t have the same stake in the matter. When the Open Europe think-tank looked at this issue, they found that most of the temp workers affected will be in the UK. They argued 77% of the impact of this regulation would be in Britain.
This is yet another example of the ugly process that began with the Common Fisheries Policy, a clever grab for our resources put in place just before we joined the EU. Ever since, from financial regulation to renewable energy targets, power grabs from Brussels at the instigation of continental politicians who don’t have our best interests at heart have been a constant threat to our economy. This is yet more evidence that we should look to establish the kind of relationship the Swiss have with the EU: trading but able to make their own decisions.
Matthew Sinclair, director, The Taxpayers’ Alliance
Cost of new laws will put workers' jobs in jeopardy
The Agency Workers Directive is a prime example of how dysfunctional our relationship with the EU has become. The government has made it clear time and time again that it wants to cut red tape so businesses can grow and create jobs. But instead it is going to preside over a massive new labour market regulation that will put people out of work.
