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Too much regulation locks people out of the workforce

Increasing amounts of regulation can lock people out of the workforce and so a different approach is needed for small and large firms, say the Federation of Small Businesses (FSB). Small firms bear a disproportionate amount of the regulatory burden, particularly around ever-changing employment legislation.

While small firms recognise that employment legislation benefits those already in employment, the FSB is concerned that by introducing new regulations, disadvantaged groups will be locked out of the workforce. This is because regulation increases the risks associated with hiring, which are particularly acute for small businesses, and can affect employers' willingness to hire in the first place.

The increasing scale of regulation also means that growth prospects are slowed, and confidence to take on staff is reduced. Recent FSB survey work showed that 30% of respondents believe that employment law is a barrier to taking on new staff, and 26% suggested that regulation in general limits their operations. More than one in five (21%) said that the risk of litigation or employment tribunals is a significant factor limiting their recruitment.

The FSB is urging all party's to recognise the importance of ensuring that small firms are able to operate as flexibly as possible to create the jobs needed in the current economic climate.

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