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January 11, 2011



So, you agree that at the margin (where ALL CHANGE HAPPENS) by reducing Labour protection, you increase productivity, decrease unemployment especially amongst the most disadvantaged? And yet you're still against the policy?

In the last sentence, why do you use the word "capitalists" rather than "bosses" or "entrepreneurs"?

You keep knocking down those small barriers to employment, and soon you're looking at an unbroken economy.


"There’s good evidence that it reduces workers’ effort and increases absenteeism"

If true, which is disputable, it's cancelled out by the evidence that points at the negative effect that a higher-than-normal turnover often has on companies in terms of both expenses (ie training costs) and productivity, and on the workers in terms of added stress, low levels of commitment and loyalty.

Philip Walker

"Yes employment protection can in theory deter entrepreneurial activity. But insofar as it does so, it might merely shift workers from those small firms which don’t start up towards larger ones, who gain market power by facing less competition from new entrants."

I don't think that making it easier for big business to screw over consumers is a plus point. And by the same token, it would make it easier for big business to screw over the workforce, too.

I'm not sure that anti-labour, anti-consumer policies are very attractive to the left, as a rule.


@ Jackart - yes, all change happens at the margin. But this does not mean that lots of change happens. If your best idea for increasing employment is to change unfair dismissal laws, you're out of ideas.
(Incidentally, you raise an interesting question: would an unregulated labour market really generate full employment? This is one for another day)
@ Philip - agreed.


"if firms know they will find it hard to sack workers, they’ll be loath to take on risky prospects"

Does protection from unfair dismissal really mean a firm will "find it hard to sack workers", though? Harder than without that protection, sure, but not necessarily *hard*. The protection requires that they have a good reason, and that they follow a procedure to allow the employee to defend themselves etc, but both of those are quite sensible things for a company to do anyway. You don't generally want to sack an employee arbitrarily, or without giving them a warning and a chance to change their behaviour, especially if they would then have to be replaced by going through a costly recruitment process (either incurring agency fees, or spending employee time on CV-sifting, interviews, etc).


I'll take option B, please Bob. Sorry, Chris.


Spot on, Tom.


please read this - it's to debunk the selective links provided by Chris Dillow when he writes that :"There’s good evidence that it reduces workers’ effort and increases absenteeism. "

There is a VAST and DETAILED body of research that links excessive job insecurity with (and, please note, this is just a small selection):

1) negative influence on motivation
2) poor attachment attitudes and behaviour ("satisfaction is a critical driver
of performance for customers", Judge, Thoresen, Bono, & Patton, 2001)
3) job satisfaction which in turn undermines...
4) ...aspects of organizational performance, such as customer service
5) poor safety compliance by employees (Probst & Brubaker, 2001)
6) reduced effort (Brockner, Grover, Reed, & DeWitt, 1992)

And we've all seen it, or (unless you've been one of the lucky ones) experienced it. Perhaps not straightaway, but when it soon becomes clear that you're disposable at any point and there are no trade-offs in terms of protection or holiday pay or other minor perks, people begin to turn over or start looking elsewhere as there's very little incentive.



Increasing the time period before there is protection is a disincentive to change jobs. It creates a bigger risk. That may be good for an individual employer, but may be not for the economy as a whole if it means people are less optinally employed.

Does anyone know if this would be in effect retrospective. (Speaking as someone who changed jobs only a few months ago - will the goalposts move?)


Sorry Chris, me again but I have a bone to pick with you.

You're always so meticulous, and rightly so, when you insist on the importance of "evidence", "small truths/big errors" and "drawing inferences" and "bias", but I took a good look at the three links you included in your statement:

"There’s good evidence that it reduces workers’ effort and increases absenteeism."

...and I'm afraid you're guilty of not practising what you preach.

Those 3 links you provided are actually EXTREMELY poor evidence, especially if accompanied by the sweeping statement that followed.

Those links are from Italian researches from the 1990s and they look at a very specific country in the wake of a very specific law (already obsolete in the current Italian labour legislation framework) which was extremely protective - overly protective in fact (and thats me saying it) - in a way not remotely comparable to anything Britain ever experienced, not even at its unionised peak.

It's like saying there's good evidence that January is not a cold month and look at this link pointing to average January temperatures from the Canary Islands.

Sorry Chris, bad move there.

I invite readers instead to take a look at the mammoth body of evidence regarding job insecurity and its noxious effects at all levels here:


Luis Enrique


I am not disagreeing with you here, just developing your point: isn't it uncontroversial that there is some (high) level of job security under which workers - on average - would slack off (particularly if pay and promotion was not linked to performance) and also some (low) level of job security where workers - again on average - become demotivated and don't think its worth the bother trying to hold on to the job. But a one-dimensional 'job security' measure isn't very useful - we can think of jobs which a very insecure (a footballer?) where they can get rid of you in an instant, but in which workers still try hard.

Still, I agree the relevant question is where the levels of job security prevalent in the UK market stand on these scales. Are there still jobs where it's too hard to get fired? How common is it for jobs to be so insecure that workers actually start performing badly an increase their chances of losing their jobs? I don't know (the research you link to is useful).


I don't think that this idea will work. Employers will sack employees if they are not satisfied with their job and will hire them whenever they need more personnel to carry on with the daily routines.


Claude - I don't dispute that job insecurity has noxious effects. But it arises from all sorts of sources, the creative destruction of capitalism being probably more important than firms' ability to dismiss employees with short tenure.
Those Italian studies matter because they are the nearest we have to natural experiments; firms unaffected by changes in employment law act as a control group which allow us to see the effects of such a change more clearly.

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