Tough economy ‘not the time’ for employment deregulation
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Photo Credit: lydia_shiningbrightly via Compfight cc

 

Deregulating the labour market during a turbulent economic cycle may not be a good idea, according to one expert on the matter.


 

Professor Guglielmo Meardi, resident expert on European employment relations at Warwick Business School, explains that deregulation typically makes it easier to dismiss staff in the short term.

 

However, it has a lesser effect in terms of boosting recruitment, which can mean a net increase in joblessness immediately following deregulation.

 

Professor Meardi points to certain economies within the eurozone as examples of where this might be occurring – and of the dangers of doing so during difficult economic times.

 

“After three years of labour market reforms and austerity, jobless figures are at a record high in the eurozone, while they decline elsewhere,” he says.

 

“This seriously questions the appropriateness of the tools used so far – all the more that the countries that have reformed and cut with most zeal, Spain and Greece, are also the ones with the worst results.”

 

He adds that deregulating the jobs market not only risks raising unemployment, but also poses an associated threat to jobseekers’ confidence and a danger of “paralysing employers”.

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