CBI warns against further labour market regulation at both UK and EU level

In May 1999, the Confederation of British Industry used the publication of its annual employment trends survey and its "business manifesto" for the European Parliament elections to highlight its continuing concerns about the impact of national and EU-level regulation on competitiveness and employment.

The Confederation of British Industry (CBI) says that its latest annual employment trends survey, published on 12 May 1999, shows that "employers are successfully using the UK's increasingly flexible labour markets to generate jobs, but that they are in danger of being hampered by new regulatory burdens". The survey showed that over a quarter of respondent companies (and over 40% of companies with more than 5,000 workers) thought that new regulations on issues such as the minimum wage (UK9904196F), working time (UK9810154F) and trade union recognition (UK9903189F) would have a negative impact on their business competitiveness. However, approaching three-quarters of all respondents believed that the legislation would not have a significant effect on their ability to compete. Similarly, some 70% ranked workforce skills as among the most important factors influencing competitiveness, and three-quarters said their staff have a flexible attitude to changes in the workplace.

Another key finding was that half the firms employing more than 500 people expected a recognition claim from trade unions under the current Employment Relations Bill's statutory procedure, rising to more than 60% of companies employing over 5,000.

The CBI said that its survey showed that the UK labour market was at "something of a crossroads". Employers and employees are "embracing flexibility" by using a variety of working arrangements, employment contracts and reward strategies, "but there is no room for complacency because [this] could be hampered by the rise in regulations that damage competitiveness. Interestingly, our survey shows that big firms are more concerned than small firms, perhaps because they can be better informed about the changes."

In its "business manifesto" for the June 1999 European Parliament elections, published in mid-May, the CBI argues that the EU must focus on job creation, not just job protection. According to the CBI, European labour markets must become more flexible to deliver high and sustainable employment, and national governments must be free to take tailored approaches to labour market policy so that they can deal effectively with "different constraints and rigidities". The CBI urges MEP s to help this happen by focusing on the need for action by Member States, not by "unnecessary legislation at the European level".

Launching the manifesto, the CBI's director-general Adair Turner said that EU social policy "should focus on the creation of new jobs, not the protection of old ones. It needs to encourage greater mobility of labour and the acquisition of new skills so people can respond to a highly competitive market place. The EU must encourage reform at national level by sharing best practice between member states. Forcing harmonisation of employment conditions and practices in pursuit of an illusory European social model would be a major threat to employment."

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