The government needs to free up labour markets and slash red tape if it is to help businesses thrive, said Prof Philip Booth, Editorial and Programmes Director at the Institute of Economic Affairs, in response to the news that the Prime Minister is to meet today with some of the UK’s biggest firms.
Six specific reforms should be considered:
- Lengthen the period of time before protection from unfair dismissal kicks in and lower the cap on compensation payable (currently around £70,000). Such moves would lower the amount of cases brought (57,000 last year), and reduce the risks to businesses of hiring new staff.
- Cap compensation for discrimination claims. It is an anomaly that unfair dismissal claims are subject to a cap but discrimination cases are not. Excessively high payouts in recent times demonstrate that something must be done.
- Introduce a fee for access to tribunals, payable should the case be successful. The actual amount can be debated, but introducing some kind of payment would stem the tide of speculative actions which are deeply damaging to small employers.
- Abolish the minimum wage. There is no EU requirement to have a minimum wage and it simply serves to increase unemployment by automatically pricing many