Labour’s pledge to close the loophole allowing employers to pay agency workers different rates will damage flexibility, business groups have said.
Under a loophole known as the Swedish derogation, employers do not have to give agency workers the same rights to equal pay as directly-employed staff. Labour leader Ed Miliband has said he would close this loophole if the party comes to power in the next election, along with a ban on zero hours contracts.
He said: “Some in business might be concerned that greater rights for vulnerable workers will impede flexibility. But they should also understand that Britain can only maintain the open economy it needs to succeed if there is also proper protection to stop this very openness fuelling a race to the bottom.”
However, business chiefs have condemned the proposal, arguing that it will mean a loss of jobs. Katja Hall, CBI chief policy director, said: “The flexible labour market in this country has saved jobs and kept our economy going during tough times. Undermining this flexibility would put the very system which has kept unemployment down at risk.”
She added: “Many businesses prefer to pay an agency to provide temporary workers using the Swedish derogation. This is perfectly legal, was supported by trade unions at the time and also gives employees security of income between jobs.”
What do you think? Will closing the loophole damage the labour market?
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