A new analysis of the economics of employment regulation claims that the opposition of much of the business lobby to many employment rights betrays an underlying bias against employment regulation which at times flies in the face of economic evidence.

The analysis comes in 'The economic rights and wrongs of employment regulation', a new Work Horizons report published by the Chartered Institute of Personnel and Development (CIPD).

While the report supports the coalition government’s better regulation agenda, it questions the case for the kind of wholesale ‘drive to deregulate’ advocated by sections of the business lobby.

It highlights evidence showing:

• The UK still has the third least regulated labour market in the world according to the OECD, despite the introduction of new employment rights emanating from Europe in the last few years.
• Rising numbers of employment tribunal claims are to a significant degree the result of an increase in multiple claims (where many employees are claiming in relation to what is in effect a single dispute with one employer) and the impact of the recession, which has seen more employees complain about being unfairly treated as employers downsized.

The report finds that job creation potential is strong, merely requiring more buoyant demand conditions in the economy to be fulfilled. And there is little convincing economic evidence that employment regulation accounts for the long standing productivity gap between the UK and major competitor economies.

Consequently, the report concludes that the prime focus of regulatory reform should be on streamlining the red tape that accompanies regulation rather than on watering down the substance of existing employee rights and entitlements.