1. UK LABOUR MARKET FLEXIBILITY - AIDING RESPONSE TO CRISIS AND ECONOMIC RECOVERY INESS INTERNATIONAL CONFERENCE Raoul Ruparel Co-Director

2. UK LABOUR MARKET RESPONSE TO CRISIS 25/11/2015 2

3. 3 UK LABOUR MARKET RESPONSE TO CRISIS

4. 25/11/2015 4

5. HOW DID THIS RESPONSE HELP? Kept employment levels high Less distortion in labour market Firms kept labour on hand to deploy in recovery Avoided loss/deterioration of skills Breaking down/rebuilding a workforce is incredibly costly Kept income flowing, helped consumption/demand led recovery Limited negative political fallout 25/11/2015 5

6. HOW DID THIS RESPONSE HELP? 25/11/2015 6

7. WHAT SPECIFIC POLICIES HELPED? 25/11/2015 7

8. WHAT SPECIFIC POLICIES HELPED? Flexible wage determination Contract and hours worked flexibility Environment for growth in self-employment Incentives to stay in work Other aspects such as use of agency workers and professional management 25/11/2015 8

9. FLEXIBLE WAGE DETERMINATION 25/11/2015 9

10. FLEXIBILITY IN HOURS/CONTRACTS 25/11/2015 10

11. GROWTH IN SELF-EMPLOYMENT 25/11/2015 11

12. INCENTIVES TO STAY IN WORK Nobel Prize Winner Christopher Pissarides captured it quite well in a 2013 paper where he said: “The reforms shifted the labour market policy incentives to employment through tax reductions and tougher unemployment (and non-participation) support, and increased the institutional flexibility of the labour market. Important reforms took place in the role of trade unions and employment protection legislation.” 25/11/2015 12

13. TO WHAT EXTENT IS THIS APPROACH REPLICABLE? Plenty of points cited so far are replicable, though self- employment requires a certain positive business climate. Quite a few issues/circumstances which are replicable: Attracting talent/immigration more broadly Sunk costs in skilled workers Inflation aiding real terms wage adjustment 25/11/2015 13

14. Low real wages Productivity problems Labour hoarding, lack of redeployment of human capital Poor matching of skills Underemployment Favour cheap labour over more expensive capital 25/11/2015 14 WHAT ARE THE POTENTIAL DRAWBACKS

15. www.openeurope.org.uk @OpenEurope info@openeurope.org.uk 25/11/2015