Regulation locking disadvantaged groups out of employment, says FSB

Increased regulation for small and medium sized enterprises (SMEs) is locking disadvantaged groups out of the workforce, the Federation of Small Businesses (FSB) has claimed. 

In a speech to the Labour Party conference in Manchester later today, the business group will argue that increased regulation is heightening the risks associated with hiring and that a different approach is needed to encourage businesses to take on new members of staff.

According to the FSB, employee regulation is currently skewed towards protecting those already in employment, while the group most in need of help are remain outside the labour market.

Although small firms are vital to job creation and supporting economic recovery - SMEs account for 99 per cent of businesses in the UK - they currently bear a disproportionate amount of costly and time consuming regulatory burdens.

National chairman for the FSB, John Walker, said that a 'one-size-fits all' approach to regulation does not work.

"Too many policymakers don't think about the consequences of policy for small firms or for the people that are on the outside of the jobs market trying to get in. Those people are more likely to be taken on by a small business due to their flexibility and so constant tinkering with the system will undermine this flexibility and result in fewer jobs being created," he said.

In a recent survey carried out by the FSB, 30 per cent of firms said employment law was a barrier to taking on new members of staff, while 26 per cent suggested that regulation affects their ability to grow as a firm.

Elsewhere it found that one in five firms view the risk of employment tribunals or being sued as significantly impacting their recruitment drive.

It is pressing for all parties to review their employee regulation policy. It wants to see various changes, including:

  • An exemption for small firms from the right to request flexible working
  • Exemption for small firms from auto-enrolment, due to come into effect for many small businesses from 2017
  • Changes to the Universal Credit system reporting for self-employed individuals.