A response to the Taylor Review

The Taylor Review calls for increased regulation of flexible work. But it ignores the costs these interventions will cause by way of reduced employment. It cannot, therefore, show that the benefits it claims would follow from its proposed regulations exceed the costs. This is a fundamental methodological flaw that renders the Taylor Review’s recommendations almost worthless.

In a response to the Taylor Review, IEA authors Len Shackleton and Jamie Whyte argue that, while Taylor praises the current flexibility of the UK labour market, his recommendations will constrain workers’ choices, reduce employment flexibility, reduce employment levels and, consequently, slow economic growth.

Forcing businesses to treat self-employed people as “dependent contractors” will generate extra costs for business because they will have to provide additional benefits. These costs will inevitably be passed on to consumers through higher prices, and to workers through reduced net wages and employment. The same will happen if Taylor’s recommended mandatory entitlements for agency workers are introduced, thus harming the very people these measures are supposed to help.

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