FSB: EU Commission missing chance to slash unemployment, says business

The Federation of Small Businesses (FSB) has called on the European Commission to reconsider its proposals contained in the Green Paper on EU labour law. The consultation period on the proposals closes today.

The FSB is concerned that the Green Paper seeks to create a ‘one size fits all’ approach to labour markets across the EU, which would further reduce flexibility in the UK labour market and put future small business and employment growth under threat. There is also little in the document to protect the right to be self-employed.

Although the Green Paper accepts that there is a need to reduce administration burdens for small businesses, the FSB is now calling for action after many years of undelivered promises.

Many workers prefer the traditional informality, flexibility and convenience of working for small businesses. Twelve million people work for small businesses in the UK alone.

Since the 1980s 80% of big businesses in the US started as small businesses, whilst in the EU 80% of big businesses are the result of mergers. This demonstrates the failure of the EU at nurturing the self employed and small businesses to become bigger.

Over 50% of jobs in the EU are created by less than 5% of hi-tech SMEs and 99.8% of businesses are SMEs – therefore the current set-up of the social dialogue with trade unions talking to big business at the exclusion of all other actors is bad for the European economy and bad for job creation.

Alan Tyrrell, FSB Employment Chairman, said:

“Decision-makers in the European Union need to bear in mind that if every small business in the EU created one new job there would be no unemployment in all 27 member states. That is the priority for employers and employees alike – small business growth leading to new jobs. The Commission must ensure flexible labour markets are restored in the EU in order to achieve this. The current Green Paper misses an opportunity to slash unemployment in the EU.

“Diversity in labour markets in different EU member states is not a ‘problem’ to be fixed in Brussels. It is a strength from which each country benefits. A uniform labour market across 27 countries is neither desirable nor practical.

“The Green Paper is right to focus on reducing the administration burden for small businesses. Administration costs and time spent filling in forms must be reduced. However, we have heard these promises before from the EU institutions. It is now time for action on this issue, which is of the greatest concern for our members.”

Notes to Editors:

1. The European Commission Green Paper on Labour Law can be found at http://ec.europa.eu/employment_social/labour_law/docs/2006/green_paper_en.pdf

2. For a copy of the FSB’s full submission to the EU Commission on their Green Paper on Labour Law please e-mail lucie.goodman@fsb.org.uk.

3. A recent FSB survey shows that 35% of FSB members have chosen not to employ anyone, considering that employees are “too great a business risk”. These fears are backed up by the call figures from the FSB legal helpline that received a massive 77,000 calls in 2006 on the subject of employment law.

4. Flexibility in labour markets is accepted as crucial by both the UK Government and the EU. It benefits employers by enabling them to adapt rapidly to changing trading conditions – vital if the UK’s small businesses are to hold their own in a global marketplace. It also benefits employees in a variety of ways, enabling them to manage their family life and have greater control over their working day, giving them greater job security in difficult times and allowing them to benefit from the financial rewards in prosperous times.

5. The FSB is Britain’s biggest business organisation with over 200,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.