Would firing staff 'at will' work? (R4)
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What is the main topic discussed in this episode?
This is More or Less, a slice of statistical lemon in the pleasant but confusing gin and tonic of media reporting. The programme now airs year-round on the World Service, but this is a full-length episode from BBC Radio 4. Hello and welcome to More or Less, bearing an Olympic-sized torch for numeracy in the news.
Your cheating heart will make you weak
This week, I ask whether it's more likely that I'm cheating on my wife or that my wife is cheating on me, although presumably I should know something about at least one side of that equation.
MUSIC
And we'll confess to our own statistical crime under the thousand-yard stare of the Lord High Executioner of Statistical Malpractice, Ben Goldacre. But first, the leaked Beecroft report has been stirring up controversy all week. It's a series of proposals for reforming employment law with the aim of boosting growth, written by a venture capitalist, Adrian Beecroft. And there's been quite a fuss. Here's a tape of some men shouting at each other.
The Business Secretary says it is the last thing government should do. Who does the Prime Minister agree with?
We need to make it easier for businesses to grow, for businesses to take people on... The report was criticised by the Business Secretary, Vince Cable, who didn't like the proposal to allow employers to fire their employees at will. Mr Beecroft, in turn, accused Mr Cable of being a socialist. I should declare an interest here. I briefly worked for Vince Cable a long time ago when he was preaching his socialism as the chief economist of a major multinational oil company. Enjoyable as this personality politics is, what really interests us is the data. The logic is pretty clear on both sides here. If employers are able to sack workers at will, they might do just that. On the other hand, if employers are able to sack workers at will, they might be much happier to hire them and give them a chance.
But beyond laying out the theoretical argument, what's the evidence that employers should be able to fire their staff at will? And come to think of it, what's the evidence that they shouldn't? Well, I've got the Beecroft report here. At least I thought I had it, but my lazy producer seems to have only printed the executive summary. Rich, could you bring the whole Beecroft report in here, please?
Tim, I've checked and that is actually the whole report.
Don't be ridiculous, Rich. This is only 15 pages long. There are no footnotes, there are no citations, there's no evidence. This isn't really a review. Well, the Beecroft pamphlet might be an evidence-free publication, but perhaps there's evidence elsewhere. So we've been looking for it. One of the obvious sources is the OECD, an organisation which does a lot of work measuring and reviewing the economies and economic policies of rich nations. We spoke to Christophe André, acting head of the OECD's UK desk, and asked him whether the UK was being held back by excessive labour regulation.
No, in comparison with OECD countries... Employment protection legislation in the UK is fairly light. Only the US has lighter employment protection legislation for regular employment. And for temporary workers, only Canada, the US and the Slovak Republic has lighter regulation.
So the OECD thinks excessive labour regulation could cause a problem, but that the UK itself is a long way from being in that situation. We also called a couple of pro-market think tanks, the Adam Smith Institute and the Institute for Economic Affairs. They welcome Adrian Beecroft's logic, but they aren't aware of any particular evidence which supports it. So I called John van Rienen, the director of the Centre for Economic Performance at the London School of Economics. If anyone would know what evidence exists in this area, John van Rienen would.
The conclusion of the vast majority of the studies is that there is actually no significant relationship between employment protection and the overall level of unemployment. For example, one recent study looked at 14 countries over about 15 or 16 years and found there was no significant relationship.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–4:32
2
What evidence does the Beecroft report present for 'hire-and-fire' reforms?
4:32–13:05
3
How do OECD and think-tank experts assess the UK's employment protection compared to other countries?
13:05–17:22
4
What do macroeconomic studies reveal about employment protection and unemployment or GDP?
17:22–24:07