The purpose of this report is to provide a balanced perspective on how modern labour markets are regulated and the associations between the degree of regulation and what impact that has on labour market and workplace outcomes. We explore whether or not there are strong associations between more liberal and more restrictive employment protection policies and macro-economic outcomes (productivity and employment) and workplace outcomes (employee perceptions of workplace conditions and job quality).

The public debate can often appear polarised between those who argue that the UK suffers from a lack of regulation, especially around protections at work, which encourages poor treatment, high levels of insecurity and widespread low pay. The Trades Union Congress (TUC), for example, has argued for stronger protections in some areas and also for measures to support wider collective bargaining. Employer organisations have expressed concern at increasing regulatory burdens on business and reducing flexibility, especially at a time of economic crisis across much of the OECD and intensifying competitive pressure from the emerging economies.

In reality, the debate is often less polarised than might be assumed, especially when we move away from a narrow focus on employment protection. For example, there is widespread industrial and cross-political party support for the National Minimum Wage, which would have been unthinkable in the mid-1990s. Organisations representing labour and capital still have their differences, but few voices on either side are calling for either a major rolling-back of the regulatory reforms made since 1980, or for a major new push towards a completely deregulated labour market. A recent CBI report notes that ‘cohesive societies … help create stable political and regulatory environments in which firms can do business.’ And while the CBI opposes further regulation in areas such as zero-hours contracts, the report does not propose further deregulation.

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Do you agree (or disagree) with the way the UK labour market is regulated?  Share your thoughts in the comments section below.

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