The Business Secretary, Vince Cable, has agreed to an EU directive forcing agency workers into the same terms and conditions as directly employed staff. Legislation will mean agency workers will effectively be treated as permanent staff after just 12 weeks in an agency role. The new law will mean firms will think twice about hiring an agency worker and the Government’s own analysis predicts the legislation will cost British business £1.8 billion annually.
Businesses will be able to pass on some of the new costs the legislation imposes onto agency employees in the form of less generous basic pay. But it is likely that many agency workers will not accept sufficiently lower pay rates in exchange for the new ‘rights’ the government and the EU have decided must form part of their employment agreements. So executives will face tough decisions about whether to hire agency workers or simply abandon their projects. And some agency workers might decide that jobs with lower pay but enhanced statutory rights just aren’t worth as much to them and not take on the assignments.
Vince Cable: not serious about growth
At this stage in the economic cycle, casual and agency staff are particularly important. Companies are especially nervous about making potentially costly decisions so the option to take on agency staff on a more flexible basis that regular employees allows them greater confidence to create jobs and prosperity. Slamming this door to prosperity shut would never make sense but to do so in the current economic climate means it’s even worse. It means higher unemployment, slower growth and a weaker economy. Just what we don’t need right now.
What we do need is less regulation and fewer restrictions on enterprise, and lower and simpler taxes. The Coalition Government claims to have a growth agenda. If it was serious about growth and getting the economy back on track, it’d ensure the legislation was stopped before it was implemented. Until they do so, it’s hard to come to any conclusion other than that they’re just not serious.
