Policy Report

Employment regulation and the labour market

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Employment regulation and the labour market

Published March 2015

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How does the UK’s employment rights framework affect labour market outcomes, and how does the UK compare with other countries? 

The CIPD commissioned The Work Foundation to conduct an analysis of employment regulation in OECD countries, to inform the debate about the extent to which the UK employment rights framework provides the right balance in providing flexibility for employers and job and economic security for individuals. 

For most of the major OECD economies the report found no overall advantage in weak or strong employment protection when looking at broad labour market measures. As the UK already performs well in comparison to many of its peers, there is unlikely to be much benefit in further regulation or deregulation of the labour market. Instead, the CIPD is urging policy-makers to focus on better workplace practices to improve productivity. Other weaknesses that need to be addressed are the issues of low pay and employment for young people. 

The report highlights that the quality of employment in the UK is much better than is often thought. The UK scores well on employee perceptions of working conditions and various aspects of their jobs.

“What we think this report is pointing to is that in the UK what actually happens in the workplace (what we term ‘practice’) matters much more for the quality and efficiency of work than legislation setting down employment rights.” 

Content of the report 

  • How the labour market is regulated 
  • Regulation and economic and labour market outcomes 
  • Employment protection and the quality of work 
  • Conclusions