Mr Wonga and the jobs factory

Apparently all we need to get our sluggish economy up and running again is the ability to sack people more easily. This according to a man who gets at least some of his wealth lending to the desperate and charging them nearly 4,200% APR. This is definitely someone whose advice I want when I am down on my uppers.

I can tell Mr Beecroft, having been made redundant myself, it is quite quick and easy enough as it is.  Within one month of being notified that my job was 'at risk' I was out the door, admittedly with three months' pay in lieu of notice in my pocket, but it was quite a shock to the system all the same.

At least my erstwhile employer had to go through some sort of due process, laughably referred to as a ‘consultation’.  Imagine what it would be like if Mr Beecroft has his way?  Employers wouldn’t even have to pretend to consult or let you get over the trauma before packing you off to the Job Centre.

Decades of hard won victories that have given workers at least some job security and the ability to plan their lives beyond next week would be undone quicker than you can say ‘debt consolidation’.  Make a complaint about being bullied by the boss?  Ask for a pay rise? Request flexible working?  Any excuse will do under Mr Beecroft’s plan for no-fault dismissals.

It’s not often Nick Clegg and I agree on anything, but on this occasion he was right:


‘There's just no evidence that in the highly flexible labour market that we have, comparatively speaking, for instilling greater insecurity and let's be blunt, fear, amongst workers, at a time of great economic anxiety as a way of fostering new employment.’


Whoa, go Clegg!

It should come as no surprise that Mr Beecroft seems unmoved by this prospect, whether or not his proposals succeeded in driving economic growth.  Echoing that Tory mantra that ‘unemployment is a price worth paying’ his view is that:


‘The downside of the proposal is that some people would be dismissed simply because their employer did not like them. While this is sad I believe it is a price worth paying for all the benefits that would result from the change.'


Well that’s ok then.  All the women, people from minority ethnic communities, the disabled, fat people, Muslims, people with ginger hair and the guy who never comes to the pub will all end up without jobs while the Mr Beecroft’s of this world make money from other people’s misery.

The chances are, however, that it wouldn’t work anyway.  Even the OECD, that bastion of fluffy liberals, says ‘there appears to be little or no association between employment protection legislation strictness and overall unemployment’.  TUC research shows the same.

You really only need a small dose of common sense to realise there can be no connection between regulation and jobs:  labour regulation has barely changed over five years but unemployment rates have gone up.  I may be going out on a limb here, but surely a far better (and cheaper) way to deal with poor performance would be through good performance management?

But it’s not just poor performance that is crippling British business.  Mr Beecroft would also like to scrap plans to introduce the right for all employees (not just those with children under 17) to request flexible working.  Oh and he’s not keen on equal pay audits either.

I am not sure what is so economically sound about having all your staff working nine to five Monday to Friday or paying your perfectly able female staff less than their male colleagues, but hey, what do I know?  I haven’t made a fortune lending money to people at rates they can’t pay back.

For a 'successful' businessman, Mr Beecroft also shows an astonishing lack of awareness about the labour market in tough economic times.  He reckons that if potential employees are told that a small business has opted out of employment regulations they would be ‘free not to take up the job if they did not wish to’.

Um, hello?  We are clearly not on the same hymn sheet, or even in the same church.  I suggest a good number of people would have little choice, leaving us with  a two-tier labour force:  those in large or very successful firms benefiting from employment regulations and those in micro-businesses offering little or no protection to their employees.

Of course, you would expect Mr Beecroft to regard employees as a cost, rather than an asset.  That aligns perfectly with his significant interest in the payday loan ‘specialists’ Wonga who, on the face of it, have little interest in the human impact of their business.

The OFT has criticised the firm for sending out letters to borrowers struggling with repayments insinuating they may be guilty of fraud and that Wonga would consider contacting the police if the customer didn’t do as they were asked.

It would be totally disingenuous for me to suggest that Mr Beecroft can see a clear connection between people losing their jobs and having to apply for a payday loan.  But it is a bit of a coincidence.

Worryingly, Mr Beecroft may be pushing at an open door, with only a rickety barrier of Liberal Democrats in the way.  Ministers have already announced they will exclude millions of people from unfair dismissal laws by only protecting those who have worked for the same employer for more than two years.  Even then, you’ll probably have to pay to bring your claim to the employment tribunal.

Good employers have nothing to fear from employment laws.  I have no sympathy with  Mr Beecroft’s idea that small businesses are unable to grow because they are run by people good at the activity at the heart of their business, like painting or driving, but with limited administrative skills.  They should go on a course then, or employ an administrator.  There you see, it’s easy, I’ve already created several hundred jobs and not a ‘no-fault dismissal’ in sight.

Posted in: Employment law

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