Regulation

Relax occupational licensing laws to speed up the post-Covid recovery


SUGGESTED ARTICLES

Lifestyle Economics
Tax and Fiscal Policy
Faced with the twin problems of NHS staff shortages and slow vaccine rollout, the fact that 50,000 retired medics have volunteered their services should be a boon. Yet so far, very few of them have actually been used.

A major problem, highlighted in a letter to the Daily Telegraph, is the perennial bugbear of ‘red tape’; once medics have left the medical register, it is difficult and time-consuming to get back on again. One frustrated lady, who retired as a GP in 2017, found that the application form required her to upload documents proving attendance at mandatory training in Conflict Resolution, Equality, Diversity and Human Rights, Fire Safety and Preventing Radicalisation.

Such stories may be exaggerated, but it wouldn’t surprise me if the ever-growing rules around medical licensing were serving to slow down re-engagement in the short run. And in the longer run, recruitment to the medical and related professions is in urgent need of reform.

New expert systems and artificial intelligence can diagnose many health problems faster and more reliably than humans. This reduces the need for much of the routine work of general practitioners, radiographers and others – and offers opportunities for less qualified staff to help with patient care. Such innovations are often resisted by traditional practitioners. For example, we ought to urgently speed up proposals to make well trained community-based pharmacists the first port of call for up to 20% of GPs’ patients with minor ailments.

And nursing, where we rely heavily on poaching trained nurses from poorer countries, needs to open up. By making the main route to nursing be via a degree, we have reduced the potential pool of domestic recruits — and ensured that many nurses are over-qualified for the tasks they perform.

But medicine is not the only area where government occupational licensing rules present problems.

The Government now decides who is qualified to work as everything from a social worker to a racehorse trainer, gas engineers to security guards and art therapists. Plans are also afoot for a new licensing regime for estate agents. Government departments, local authorities, quangos and professional associations lay down strict rules about academic and vocational qualifications, on-the-job training (such as the requirement for returning doctors to know all about the Prevent strategy), tests of competence, continuing professional development and codes of practice.

This all stems from a belief that an uninformed public must be offered official protection from incompetent or unscrupulous producers of goods and services. Fearful of being blamed for random tragedies, politicians and regulators have abandoned caveat emptor and reliance on the public’s common sense.

Yet the information asymmetries that gave rise to such exploitation are being mitigated by online access to formerly inaccessible knowledge, while the easy availability of consumer ratings is as good a way as any to highlight shoddy service. What’s more, the emergence of new technology means professionals no longer have such a monopoly on certain insights or knowledge.

Barriers to work

The profusion of licensing is more than just an inconvenience: it makes it much more difficult and expensive to enter many occupations. That means people who can’t finance long periods of training tend to be excluded, reducing the diversity of the occupational workforce. Older workers and labour market returners find it too difficult to retrain. Social mobility is reduced.

These requirements are often lobbied for by unions and professional associations to reduce competition and enhance the pay and prestige of their members, rather than the ostensible reason of protecting the public. Indeed, a major recent study by OECD economists cites worldwide evidence that occupational regulation raises prices, reduces the number of market entrants, and lowers employment – while showing no clear evidence of improving perceived quality of services. The authors argue that productivity could be significantly enhanced in the UK and elsewhere by liberalising occupational rules, and point out that relaxing entry requirements would open occupations to a range of disadvantaged groups who may lack formal qualifications but do possess other relevant skills.

This argument is all the more urgent in our Covid-ravaged economy, with both new labour market entrants and older workers who have lost their jobs now facing extremely bleak career prospects.

So what should be done? Among the measures the Government could bring in are making it possible for graduates to teach in state schools without formal teacher training (as is already common in the private sector) or for nurses and social workers to enter the profession without a degree. We could also revisit childcare rules preventing migrants or those with poor language skills or formal qualifications from being involved.

Such changes could open up individual opportunities and make new business models possible. Where the public needs to be protected, concern should be directed towards the output of services rather than the input of government-licensed employees. Employers (and the self-employed) need to be able to determine the best way to serve the public, rather than having to follow a strict government-dictated blueprint – especially in times like these.

 

This article was first published on CapX.

Suggestions for further reading:

Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.


Leave a Reply

Your email address will not be published.


SIGN UP FOR IEA EMAILS