June 02, 2016

Do Workers Now Have Too Many Rights?

This post has been contributed.

Nobody wants to see a return to the days to nineteenth-century factory work. The working day was long and monotonous. And the work itself was downright dangerous. But the question has been raised as to whether workers today have too many rights. Is that true?

Employment law has changed a lot since the early days. In the middle of the nineteenth century, workers weren't able to bargain for better pay. They either took what they got, or they found something else. But once workers started to band together all that began to change. Workers suddenly got the right to unionise, thanks to political changes. And this increased unionisation had a number of profound effects in the twentieth century.

The most important effect was that workers’ pay started going up. In unionised industries, pay tended to be a lot higher than in non-unionised industries. In turn, that made the industries themselves more attractive to workers and many workers found jobs.

But the other effect was that it made employing people less attractive to industry bosses. They didn’t want to have to pay all the extra compensation. And so they looked for ways to automate labour. Of course, early on, the incentives to do that were small. Yes, workers were paid slightly more, but it still paid the owners of businesses to employ them.

But since the end of the second world war, workers’ rights have continued to advance. In developed countries, much of the legislation has revolved around discrimination. First discrimination based on gender was eliminated in the 1960s. Then, after that, discrimination based on race, thanks to the civil rights movement. Then, following on from that, a whole raft of anti-discriminations measures. Businesses could no longer discriminate on grounds of sexual orientation, religion or age.

By the 2000s, the legislative reforms were complete. And practically everybody celebrated them, even businesses themselves.

The Problems

But, of course, these reforms came with significant costs. One of the biggest costs was the fact that businesses were now far more exposed to legal proceedings. Once the legislation came in, businesses could face employment tribunals on grounds of discrimination.

Businesses started looking for employment tribunal representation. They needed some form of legal protection against the increasing frequency of tribunals. And they needed to be far more careful in the way that they recruited and treated staff.

Many saw this as a victory for the worker. After all, who wants to see discrimination in the workplace? Nobody. But of course, it might now be working against the interest of workers themselves. Let’s take a minute to think about this.

One of the biggest problems that workers now face is that they are a lot more expensive to employ. Companies must take out insurance to cover the costs of litigation. And they must be vigilant against future legal claims. Remember, it’s not just the direct costs of employment that companies have to worry about. It’s the risk that they might get sued. And each time they take on somebody new, they have to factor in this risk. If the risks go up, then from their perspective, so too do the costs of employment. And if those go up, then they’re less likely to want to employ somebody new.

But it’s not just in matters of discrimination where workers’ rights have expanded. Worker’s rights have also expanded in other areas. Workers are entitled to workplace pensions, parental leave and minimum wages. And all these things sound great on paper. In fact, anybody with a shred of decency would want these policies to remain in tact.

But of course, these policies don’t come for free. Somebody has to pay for them. And that person is usually the workers themselves. Why? Well, the problem is that all of these policies have the effect of making labour a lot less attractive. If employees are able to sue their bosses every five minutes, then their bosses aren’t going to want to take them on.

In individual cases, we wouldn’t expect this to have much of an effect. But when we’re talking about the whole economy, the effect on workers is large.

The main issue seems to be that a lot of these employment policies were a great idea when they were introduced. In the past, employers had little choice but to employ real people. Not much production, especially in services, could be automated. And so employers had to just accept that labour was expensive. Ultimately, they passed these higher costs onto consumers.

Now, though, the situation is changed. It’s no longer the case that human labour is sacred. There is the real possibility that robots will replace people over the next three decades. And that process will occur far more quickly, the more expensive is labour.

The Solutions

So what’s the solution? We can’t go back to the nineteenth century working conditions. We’ve moved on since then, not to mention the fact that going back would be political suicide. And we can’t carry on as we are now, mainly because of the threat of automation.

The solution might be found within businesses themselves. Businesses work best when they have a vibrant and diverse workforce. But to achieve this, they need to have excellent human resources credentials. For employees to succeed, they need to find businesses that have a great culture. The culture needs to be one of constantly moving people forward and increasing their skills. The best defence that many people can have against automation is to increase their value to the companies they work for. Yes, employment law makes employing people less attractive. But workers themselves can do a lot to counteract this. They can work hard to make themselves more attractive. Having great skills and doing a great job is one way to secure this.

Of course, there will always be times when employers have acted unjustly towards their staff. And in these situations, tribunals are justified. But it’s the wider, systemic effects that should worry us if we want to keep people in work.

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