New employment laws will hit jobs and profits, UK firms warn

New employment laws are hitting the profits of UK manufacturers and resulting in work going overseas, claim UK employers. A quarter of the manufacturers surveyed by NSM Research said new laws on working time, minimum wage and parental leave would decrease their profits. None of the companies questioned said the laws would increase profitability. One […]

New employment laws are hitting the profits of UK manufacturers and resulting in work going overseas, claim UK employers.

A quarter of the manufacturers surveyed by NSM Research said new laws on working time, minimum wage and parental leave would decrease their profits.

None of the companies questioned said the laws would increase profitability. One in five companies in all sectors said the legislation would decrease profitability.

One multinational manufacturer based in Devon said much of its production was being tranferred to eastern Europe as a direct result of the increased employment costs in Britain.

`We are still seeing work that was done in this country being moved abroad and it is on a cost basis,’ said the company’s head of human resources. `With this company, some of that shift may have happened anyway, but the legislation has increased the cost of manufacturing in this country.’

A Department of Trade and Industry spokeswoman said that greater staff rights provided by the legislation would lead to cost savings for employers via reduced staff turnover and absenteeism rates.

`We believe that adopting family-friendly policies, as well as encouraging greater partnership and co-operation in the workplace, will increase employee commitment and productivity,’ she said.

A spokesman for the Engineering Employers’ Federation said the main concern was the cumulative effect of the new laws rather than any single piece of legislation.

`Our general view is that it is not one single issue that people are concerned about, rather it is the cumulative effect of the legislation,’ he said. `There is Fairness at Work, working time and proposals on information and consultation and it is the build-up of all this which is a concern.’

But he added that manufacturers are far more concerned about the impact of interest rates and the strength of the pound on their profitability.

Anne Minto, head of human resources at aerospace giant Smiths Industries, expressed surprise at the survey’s findings. `I do not think these pieces of legislation should hit profits. Within engineering I can’t see that the minimum wage would have that kind of impact because most companies pay well above the minimum rate. It certainly would not affect us.’

John Robinson writes for Personnel Today magazine