Taylor review fails to factor in costs to employees of proposed interventions

Summary: 

  • The Taylor Review should be commended for recognising the success of the UK’s flexible labour market and for refusing to endorse the outright bans on zero-hours contracts and app-based “gig” economy advocated by the Labour Party, trade unions and other pressure groups.

  • However, its recommendations for further regulation of these types of work seem likely to inhibit their growth and reduce the benefits going to both consumers and workers.

  • The Review’s failure to address the likely costs of its proposals through reduced employment is a serious methodological error which undermines the case for their proposals.

  • The Review fails to make a convincing argument that large numbers of workers are disadvantaged by working in different ways from the traditional model. It downplays the costs of forcing businesses to treat self-employed people as “dependent contractors”.

  • Taylor and his team pay insufficient attention to the variety of jobs available in these new forms of employment, falling back repeatedly on a stereotype of badly-paid work and vulnerable workers. They fail to stress that traditional forms of regular employment are not accessible, or are unattractive, to many of those working in this way.

  • Giving gig workers and other self-employed people access to similar benefits as standard employees will add to costs, which will be passed on to consumers and workers themselves rather than ultimately borne by large businesses.

  • The proposal to increase national insurance contributions by the self-employed will cut their net incomes and perpetuate the increasingly meaningless distinction between national insurance and income tax.

  • Placing further restrictions on Agency Work goes beyond what is required by the Agency Workers Directive, which British governments opposed in the past. They will add to costs and reduce employment.

  • Many of the Review’s proposals for promoting “Good Work” are probably
    harmless, often because they are mere waffle. However, they underestimate the difficulties of assessing just what employees want from work, and of changing business behaviour. The proposed requirement to publish elaborate indicators of the “quality” of work will be an additional burden on firms and the taxpayer, and promote the mistaken notion that businesses exist to serve employees rather than consumers.


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Jamie Whyte is the IEA's Research Director.