The main aim of the supply side reforms has been to make the market work better. That includes reducing regulations that makes it more costly for businesses to operate. By reducing costs not only do profits and so investments rise, but firms are more confident in their chances of success and so expand more quickly.
One area of concern has always been the ease with which firms can get rid of staff. If it is easy to fire staff then, so runs the argument, firms will be more willing to hire staff. If it is difficult to shed staff then firms will hold back on recruitment just in case they don't need the staff for long.
A classic example is the French who provide employment protection after just three months. As a result many French workers find themselves on a series of short contracts making it impossible to borrow money long term.
Now the government is proposing making the cost of losing staff less by altering the rules on compensation for unfair dismissal. The Business Secretary, the very sensible and wise economist Vince Cable, (no political bias here) has rejected the idea of 'no fault dismissal' which would allow hiring and firing at will. But he has supported the idea of reduced compensation.
Will this accelerate the rate at which firms hire labour and help reduce unemployment? That is the acid test.
I think it might actually be a good idea especially in terms of keeping the efficiency of the UK’s workforce high. If you’ve worked somewhere for a long time, it is likely that over the years your standards and inputs start to slip, you might not turn up as early as you used to, you might not do as much work as you used to get done. So if the system was that you knew you were there for a short while, or you are more likely to get fired sooner it would encourage everyone to work harder, and ultimately we would have a better economy because our workforce would be more efficient.
ReplyDeleteThe only major downfall I feel this system might bring is the lack of opportunity for undergraduates to get jobs. If a firm aims to fire and hire every 3 months, there are less likely to consider an undergraduate who would have no experience because it might take them about a month initially to learn about the company etc, which might seem a waste of time to a firm. So in that sense it might put a lot of undergraduates at an even worse position because firms are looking to hire people who are ready to start as soon as possible. The other negative of course being it is never easy finding a job, let alone trying to find a job every 4 months or so, which means that this system can and will only work if every firm adopts this system, to avoid the likelihood of an increase in unemployment. However overall I think it would shock but definitely urge the UK to take work more seriously.
Well I had better move on fast before my standards slip then. See you sometime during the lesson, read on until I get there.
ReplyDeleteI think that in theory it might work, but in real life it might just bring about chaos and unstability in many people's lives like some of the French people that are finding themselves on short term contracts. If there was to be an increase in firing and hiring this may bring around confusion and unstability in different work sectors, demands and requirements of differnt sectors could really change. Also, for a company to measure their ability/limits of firing and to measure the demand for their jobs that would become vacant in their company could be very hard. But on the other hand,this might decrease rates of long term unemployment and the 'pool' of unemployment will continuously be changing with people coming in and hopefully going out quickly.
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