Vince Cable, the Liberal Democrat Business Secretary, has agreed to a controversial European directive to give agency workers the same rights as full-time employees of British companies.
An analysis of the new laws by the Department for Business discloses that it will cost firms more than £1.8 billion a year, leading to warnings from major employers that they will have to cut jobs.
The laws, which will give more than one million workers the right to the same holiday time, pay, maternity leave and other perks, will come into force next month. Under the legislation, agency workers will effectively have to be treated as full-time workers after 12 weeks.
The laws are being introduced despite a pledge by George Osborne, the Chancellor, to boost economic growth by cutting red tape and other obstacles facing businesses.
Ministers have conceded that they have effectively been forced to introduce the “disappointing” laws after pressure from trade unions.
Last night, business leaders urged the Government to postpone the legislation until the economy has recovered. David Frost, the director-general of the British Chambers of Commerce, said: “The Government claims business growth is top of the agenda, yet UK firms will be hit with huge costs once these new regulations come into force.
“Companies cannot generate growth and create jobs when they are facing such a costly bill just to implement new employment legislation.
“Unless the Government reduces this kind of red tape, we will continue to have high levels of unemployment and could end up derailing the recovery.” The legislation stems from an EU directive initially agreed by the Labour government following pressure from the unions.
After the formation of the Coalition, the proposals were reviewed by Liberal Democrat ministers who approved the legislation.
Since the decision was taken, however, the economic situation has deteriorated significantly and senior Conservatives are understood to be angered by the forthcoming laws.
The official analysis discloses that the legislation will cost firms more than £16 billion over the next decade.
The typical small business will have to pay an extra £2,493 a year, increasing to £73,188 for large firms.
Public sector employers will have to pay an additional £259 million a year, although the Treasury expects to generate up to £332 million in taxes paid by workers earning more.
The analysis warns that ministers are effectively forced to introduce the measures as a result of the EU directive or they could face legal challenges from agency workers.
The Institute of Directors says it has taken advice from EU legal experts who claim that the Government “gold-plated” the directive. The business group says the laws could have been introduced in a far more limited form.
Alexander Ehmann, the head of regulation policy at the Institute of Directors, said: “This is a really significant piece of legislation with very high costs for business. It will undoubtedly lead to less job opportunities and is wholly inappropriate in the current economic climate. It is a very unhelpful move.”
Mr Osborne and Treasury officials are thought to be drawing up policies to boost growth which will be unveiled later in the autumn.
The Government is expected to announce in next year’s Budget that the 50p higher rate of tax will be scrapped after being blamed for deterring entrepreneurs from setting up in Britain.
Central bankers will also meet in Wyoming this weekend to discuss the economic situation caused by the eurozone crisis and ongoing arguments about government spending in the US.
The meeting is expected to be dominated by discussion of whether a third round of quantitative easing, printing more money to buy assets, is necessary.
Investors are hoping that the US Federal Reserve will indicate that it intends to pump more money into the economy. If it does not, stock markets may fall sharply again next week. Yesterday, a member of the Bank of England’s Monetary Policy Committee said that there may also be the potential for more quantitative easing in this country.
“We are exposed to financial contagion from both the euro area and the US,” Martin Weale said.
A spokesman for the Department for Business conceded that the new employment laws were “disappointing”. He said: “Ministers discussed these European regulations on a number of occasions with both the CBI [lobby group] and the TUC [union], seeking agreement on changes that we considered would have been to the benefit of both employers and agency workers. Unfortunately it was not possible to find a way forward that would be acceptable to both parties.”
By Robert Winnett taken from http://www.telegraph.co.uk/finance/jobs/8723731/New-EU-job-rights-will-derail-British-recovery.html
“Companies cannot generate growth and create jobs when they are facing such a costly bill just to implement new employment legislation.
“Unless the Government reduces this kind of red tape, we will continue to have high levels of unemployment and could end up derailing the recovery.” The legislation stems from an EU directive initially agreed by the Labour government following pressure from the unions.
After the formation of the Coalition, the proposals were reviewed by Liberal Democrat ministers who approved the legislation.
Since the decision was taken, however, the economic situation has deteriorated significantly and senior Conservatives are understood to be angered by the forthcoming laws.
The official analysis discloses that the legislation will cost firms more than £16 billion over the next decade.
The typical small business will have to pay an extra £2,493 a year, increasing to £73,188 for large firms.
Public sector employers will have to pay an additional £259 million a year, although the Treasury expects to generate up to £332 million in taxes paid by workers earning more.
The analysis warns that ministers are effectively forced to introduce the measures as a result of the EU directive or they could face legal challenges from agency workers.
The Institute of Directors says it has taken advice from EU legal experts who claim that the Government “gold-plated” the directive. The business group says the laws could have been introduced in a far more limited form.
Alexander Ehmann, the head of regulation policy at the Institute of Directors, said: “This is a really significant piece of legislation with very high costs for business. It will undoubtedly lead to less job opportunities and is wholly inappropriate in the current economic climate. It is a very unhelpful move.”
Mr Osborne and Treasury officials are thought to be drawing up policies to boost growth which will be unveiled later in the autumn.
The Government is expected to announce in next year’s Budget that the 50p higher rate of tax will be scrapped after being blamed for deterring entrepreneurs from setting up in Britain.
Central bankers will also meet in Wyoming this weekend to discuss the economic situation caused by the eurozone crisis and ongoing arguments about government spending in the US.
The meeting is expected to be dominated by discussion of whether a third round of quantitative easing, printing more money to buy assets, is necessary.
Investors are hoping that the US Federal Reserve will indicate that it intends to pump more money into the economy. If it does not, stock markets may fall sharply again next week. Yesterday, a member of the Bank of England’s Monetary Policy Committee said that there may also be the potential for more quantitative easing in this country.
“We are exposed to financial contagion from both the euro area and the US,” Martin Weale said.
A spokesman for the Department for Business conceded that the new employment laws were “disappointing”. He said: “Ministers discussed these European regulations on a number of occasions with both the CBI [lobby group] and the TUC [union], seeking agreement on changes that we considered would have been to the benefit of both employers and agency workers. Unfortunately it was not possible to find a way forward that would be acceptable to both parties.”
By Robert Winnett taken from http://www.telegraph.co.uk/finance/jobs/8723731/New-EU-job-rights-will-derail-British-recovery.html
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