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10 January 2011

“Employers’ charter” is another attack on Britain’s youth

If Cameron is serious about creating jobs, he should cut National Insurance – not workers’ rights.

By Duncan Robinson

A new “employers’ charter” will make it easier for companies to sack employees and will reduce the amount of statutory sick pay that workers can claim, according to the Daily Telegraph.

The proposals will allow companies to sack employees within the first two years of employment without the chance of being taken to an employment tribunal for unfair dismissal. Under current legislation, all employees have recourse to a tribunal if they have been employed for longer than a year. A reduction in the amount of time an employee can claim mandatory sick pay, capped at 28 weeks at present, is also included.

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It is hoped that the proposals will encourage small- to medium-sized businesses to employ more staff. One of the main beneficiaries of the scheme will be young people looking for work, according to a “Whitehall source”:

The thrust of the initiative is that to persuade companies to hire people we need to make it easier to fire those workers who aren’t up to the job, so there is less risk in taking on new people, especially the young.

The logic is that Britain’s 4.6 million small businesses are straitened by the current employment legislation. Tesco can afford to splash out for 28 weeks of sick leave; a cornershop can’t. Reducing the potential liability of companies will encourage them to take risks and employ more workers.

But helping employers need not weaken the rights of workers, particularly young workers starting their careers – the ones most likely to be affected negatively by government moves to make it easier to sack new employees.

Employers already have an extremely strong hand when it comes to employing young people. One in five 16-to-24-year-olds in the UK is unemployed – more than double the overall national rate. Graduate jobs already attract nearly 70 applicants per place. Highly qualified young people are prepared to work for months for free for the chance of getting a job. The “jilted generation” is getting desperate. They don’t expect a job for life – a job for now will do. This is another policy that makes it a little bit worse to be young and living in Britain today.

Aside from the fact that it hits young people hardest, there is another problem with the charter. Though it may reduce some of the risks of employing someone, it does not directly reduce the cost.

During the election, the Conservatives hammered Labour plans to increase National Insurance as a “tax on jobs”. In government, however, the coalition has done little to alleviate the cost of National Insurance – however much it is, Alan – for businesses.

The government announced a 12-month “National Insurance holiday” for new firms this summer, but this does little to stop the pain of established but struggling companies. They are still left stumping up an extra 12.8 per cent on top of the salary they pay to every employee. What would be a bigger a fillip for employers: reducing the very real expense of National Insurance, or lowering the hypothetical cost of a worker’s broken leg?

If David Cameron is serious about creating jobs, he should cut National Insurance – not workers’ rights.