Thursday, 1 April 2010

The counterproductive effects of labour laws

Jamie Whyte's latest article, written for the Cobden Centre, considers the European Court of Justice's strange interpretation of "entitlement", and explains why unions support restrictions on working hours [hint: it's not concern for the welfare of workaholics].
In 2006, the European Court of Justice ruled that the Department of Trade and Industry has misinterpreted clauses 3 and 5 of the Working Time Directive. Clause 3 states: “Member states shall take the measures necessary to ensure that every worker is entitled to a minimum daily rest period of 11 consecutive hours per 24-hour period”. Clause 5 says that workers are additionally entitled to at least one uninterrupted rest period of 24 hours every week.

The tricky word here is “entitled”. The DTI interpreted it to mean entitled. They instructed employers that they must allow, but need not require, employees to take these rest periods. According to the ECJ, however, “entitled” actually means obliged. Employees may not choose to take shorter rest periods, and employers must not give them this option.

The European judges are surely correct on the matter of interpretation. If the words of European legislators are open to several interpretations, then deciding which was intended is simple; it must be the one that most restricts freedom of choice. And if you think that obliged is not a possible interpretation of “entitled”, then there is much you could learn from the judiciary about post-modern semiotics.

If not surprising, the ruling may still seem unfortunate. British employees already enjoyed the right to these rest periods. When it suited them, however, they were free to take shorter breaks – perhaps to earn overtime or to negotiate a longer break for another occasion. This option was surely valuable to them. Why should the manufacturing union Amicus have asked the ECJ to eliminate it? And why should the TUC have welcomed the ECJ’s ruling?

To see why, note that in the labour market employees are the suppliers and employers are the consumers. Employers buy the labour offered for sale by workers. The Working Time Directive, as now interpreted, is a regulation about the kind of service workers may offer for sale.

Product regulations usually impose minimum standards. When it comes to labour, however, we get maximum standards. The ECJ’s ruling means that, with respect to the flexibility of hours worked, employees may not offer a product exceeding a certain quality. And that is precisely why unions support this interpretation. Maximum standard regulations are required by suppliers attempting to fix their prices above the market price.
I thoroughly recommend the whole article.

Whyte concludes with a clear articulation of one of my recurring thoughts — in a welfare state, why do we need labour laws?
Labour laws are intended to protect employees from employers. But no such protection is needed. Feudalism ended long ago, and the labour market is not a monopsony (a market with only one buyer). No one is forced into any particular job. Indeed, unemployment benefits mean that no one need work at all. Labour laws merely distort the allocation of labour and arbitrarily bestow costs and benefits across the population. They should not be interpreted more stringently; they should be repealed.
There is much to dislike about our current welfare state, but a properly crafted safety net can set us free. Welfare means that nobody need tolerate workplace abuse, or unwanted advances; it allows dangerous work to be safely refused; and it removes any moral justification for crime — nobody is forced to choose between stealing and starving.

Guaranteed a certain basic standard of living, people should be free to work as much or as little as they like, for whatever wage they are prepared to accept, in any employment that does not infringe upon the rights of others.

It is insane at all times, but especially in the midst of a recession, that our government creates barriers to employment, and discourages work.

No comments:

Post a Comment