It has been pointed out on here many times that all our wealth, ultimately, comes from the private sector making profits. Everything else is parasitic on this. So the easier we make it for the private sector to work, run and compete effectively and efficiently the better off we all are. This is irrefutable fact, even though socialists and unions are in denial.
For any company the most important element of their existence is the people they employ. With the right people you can get everything else you need. With the right people doing the right jobs with the right management it is easy to find ideas, money, customers and everything else that a business needs. So private sector organisations put a lot of effort into employing the right people, giving them the right work, training them, rewarding them and managing them effectively. It could be argued that this is all there is to running a business.
People are so important that having the wrong ones can be a huge burden. And as both businesses and people are constantly changing, dynamic entities it is inevitable that sometimes an employer and an employee are better parting company. Under current British law it is perfectly OK for the employee to do this any time that they want, potentially taking with them a huge investment in training and knowledge without having to compensate the employer in any way whatsoever. Yet it is very difficult indeed for an employer to get rid of an employee who is no longer wanted or needed.
Of course this is the legacy of misguided socialists and over powerful unions and it is very damaging to everyone in Britain, here’s why:
- Huge increase in unemployment because employers are unwilling to take on staff they subsequently can’t get rid of. This happened on a large scale in France.
- Huge increase in employment in our global age as employers move jobs offshore where there is greater labour flexibility.
- Places a huge administrative burden on businesses, especially the small and medium sized enterprises where most private sector employees work.
- Companies making far less profit (national wealth) because they are carrying the burden of the wrong people.
- Companies denied the flexibility to expand and contract to meet the needs of the market. Ultimately this means less profit and less jobs.
- Creates a whole parasitic employment law industry that benefits nobody.
- People stuck in jobs where they do no good (or even do harm) when they could be contributing to the economy far more effectively doing a different job or in a different company.
- Risk aversion. Companies are loath to try something new in case it doesn’t work and they are stuck with the staff.
So it is self evident that employment protection laws are a very bad thing for this country and that they should all be removed. Employer should be able to hire and fire at will. If this was enacted our economy would boom like crazy. So it was excellent news yesterday that George Osborne (who has grown massively in stature over the last year), speaking at the Institute of Directors, revealed that the government was going to tear up sections of the employment law. Obviously the deeply embedded socialism in this country means that he will not be able to go as far as is necessary, but acknowledging the problem and making a start is pretty much all we can expect for now. Let’s hope this is the first step towards true liberalisation of the labour market.
Reacting to this Brendan Barber who is general secretary of the TUC and thus self evidently a dinosaur said: “Making it easier to make people redundant and giving the workforce less time to come up with alternatives to job losses threatens to make unemployment even worse”. How sad, if he understood economics and business he would understand that the exact opposite is true. If Brendan Barber wanted to do the British working man a favour he would be working with employers to increase productivity. It is only by being competitive that the country can prosper.