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Hiring of non-standard workers PDF Print E-mail
Wednesday, 24 January 2007

The FPB has today warned of the dangers arising from potential new EU red tape governing the hiring and deployment of non-standard workers and the economic risk associated with small businesses having to cope with yet more red tape.

“A significant number of our members already think that red tape relating to employment is hindering their expansion,” said the FPB’s Chief Executive Nick Goulding. “The last thing they need is for their hiring of contractors, agency workers and the like to be subject to extra rules as well.”

The green paper aims to kick off a debate on the treatment of contractors, freelancers, self-employed workers, agency workers, and people on fixed-term contracts. It is an open-ended consultation paper, but the origins of the paper are clear.

“This has come from the unions,” said Mr Goulding. “Their aim is for this to lead to extra regulation. What is interesting, though, is that none of the types of workers covered by this paper are actually members of trade unions. Union members are generally employed workers. So why are they stepping outside their mandate?” he asked.

“It was the same with the Agency Workers Directive,” he said, referring to the proposal permanently stalled without agreement in the Council of Ministers to regulate workers hired from recruitment agencies. “Agency workers are not unionised, so why were the unions pretending to speak on their behalf and calling for regulation? The agency workers were not exactly falling over themselves asking for it, and neither, now, are contractors and freelancers asking to be regulated.”

Mr Goulding believes the reason is protectionism. “The unions are simply trying to shield their members from competition from people working on more flexible and less costly arrangements,” he ventured. “It’s a classic case of grabbing the wrong end of the snake. Instead of going in for protectionism and red tape to shield their members, they should look at why employers find it so costly to hire normal employees. The red tape is hindering job creation and therefore adversely affecting workers,” he said.

Colin Merchant runs MBH Industrial Services in Taunton and has already felt the pinch caused by regulation in this area. He said: “In our business, we go through peaks and troughs, and in the past, we used self employed workers in our busiest periods to help out. What the Government has done now makes this impossible – it’s a classic new Labour cock up. It worked perfectly to have somebody for three weeks a year when we were busy, no sick pay, no holiday pay, with their own van and tools, it was perfect.

Mr Merchant went on to outline how treating subcontractors like employees impacted on his own business; “Now we have to take them onto the books and treat them like full-time employees, it’s ridiculous. From now on, we’ll struggle through with our own workers, subcontracting is not worth the hassle, even if it means turning down work.”

The FPB has questioned the need for EU-level action in this area. Employment and social affairs are a shared competence, and so, according to the principle of subsidiarity, the EU should only intervene where member states cannot solve a particular problem for themselves. Any EU legislation that arose from the green paper would probably be aimed at preventing ‘disguised employment’, a situation where employed workers are classed as self-employed to avoid social security costs.

“I am at a loss to understand why member states can’t sort that problem out for themselves, taking into account the working cultures in their respective countries,” said Mr Goulding.

The FPB is calling on the European Union to take note of a recent report by the Organisation for Economic Co-operation and Development (OECD), which blamed inflexibility and rigidity for sluggish growth and urged EU countries to remove red tape that made it more difficult to hire and fire workers.

“Instead of being sidetracked into one of the few areas they haven’t yet managed to regulate, the EU should instead focus on repealing existing damaging regulations. That would be a step towards becoming the competitive and dynamic economy the EU wishes to be,” Mr Goulding suggested.

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