Labour Market

Flexible work mandates impose a disproportionate burden on employers

Prof. Len Shackleton writes for CapX

IEA Editorial and Research Fellow Professor Len Shackleton has written for CapX outlining the hidden costs of flexible work mandates.

Len wrote:

“One thing missing from this one-sided debate is why flexible working is not already offered by all employers, and why compulsion is now needed. The answer must surely be that for many employers flexibility imposes significant costs.

“More generally, where flexibility gives rise to extra costs, this will likely have an impact on pay. Employment mandates of all kinds – other examples include pension obligations and holiday entitlements – reduce employer profits. In competitive markets the extra costs are gradually passed on to employees in terms of lower pay. Moreover, reduced pay is not confined to those taking advantage of flexible working, but the cost falls on all employees.

“The considerable expansion of employment mandates in the last 20 years is one important – and very little understood – reason why pay has grown only very slowly. In the current climate of falling real wages, to add to employer costs is not an obviously sensible policy.”

Len’s full article can be read here.