Employers threaten to move abroad

Monday, 1 September 2003 12:00 AM

Employers are warning that the UK's competitiveness is being eroded by increasing regulations and taxation.

The Confederation of British Industry (CBI) revealed that firms are considering moving abroad to take advantage of cheaper labour costs.

In a new report it highlights that of the firms that either moved or are considering moving abroad 55% said labour cost was or would be the most important factor in their decision.

According to the report, the cumulative impact of employment legislation means British firms have less freedom to organise work patterns, adjust work force sizes and set wages; whereas France, Germany, Spain and Holland have all liberalised in one of these areas.

Digby Jones, CBI director-general, commented, 'Labour market flexibility has been a jewel in the crown of the UK economy for 20 years, but other countries are threatening to steal that jewel.'

'In areas where the UK is strong, we are moving in the wrong direction. In areas where the UK is weak, our improvement is only patchy. The price could be extremely high because our competitors are closing the gap.'

The CBI blames a 'relentless build-up' in employment legislation and 'appallingly low' skills levels which are not improving fast enough. The CBI points out that poor literacy and numeracy affects 20% of British adults, higher than any nation in the study. It warns that 74% of the workforce in Germany has A-level equivalent qualifications compared to 37% in the UK.

Employers' argue that European Union regulation has caused the most damage to the UK's labour market, partly because the regulations have more impact on the UK's less regulated workforce.

Mr Jones added, 'The government should resist further EU employment law and speed up improvements in the education system. The EU now has good quality minimum employment standards, making further intervention inappropriate and unnecessary.'

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