Is Flexible Working?

A new IEA Discussion Paper by Professor Len Shackleton and Annabel Denham

• Governments are constantly tempted to push flexible working because it allows them to support a popular social change without having to pay for it themselves.

• The new, stronger “right to request” flexible working in the Employment Rights Act will be much harder for managers to resist, and even dealing with such requests will impose costs on companies.

• While private businesses may be able to control some of these costs, the widespread strengthening of flexible working rights is likely to damage productivity, slow growth, and undermine wages and employment

• This will be all the more true if unions or workplace rules stop wages adjusting, for example to reflect whether particular jobs can in practice be done remotely. This is likely to be a particular problem in the public sector, reinforcing its existing poor productivity record.

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Changes to our way of life during the Covid lockdown accelerated an existing drive for more flexible working opportunities.

However, the costs of flexible working requirements have rarely been properly assessed and could extend to undermining growth, increasing unemployment and the rise in post-Covid withdrawal from the workforce.

UK employers already offer a wide variety of non-traditional work options. Where this is the result of employers voluntarily offering such options and workers voluntarily accepting them, this is compatible with classical liberal approaches to the employment contract and economic efficiency.

The rationale for the ‘right to request’ flexible working has expanded from concern for economically disadvantaged workers with health issues or caring responsibilities to a belief that all employees should be able to request a change to their working arrangements.

The Employment Rights Act strengthens the ‘right to request’ flexible working arrangements and will make it very difficult for organisations to resist such requests.

Flexible working arrangements advocated by pressure groups and trade unions include the right to work at home, to work compressed hours or a four-day week, a ‘right to disconnect’ and extended and more generously funded parental leave.

All of these arrangements have bene ts for some employees, and a monetary value can be attached to them. However, as other employees cannot bene t from these opportunities because of the nature of their jobs, pay relativities may need to adjust, and this could present difficulties where pay structures are rigid as a result of union pressures.

Despite claims that flexible working is virtually costless to employers, this is not generally true; otherwise, flexible options would be offered voluntarily. Where employers face significant extra costs, these will be passed on to consumers in the form of higher prices and to workers in terms of lower wages and/or fewer job opportunities.

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A concern is the way in which effective employment mandates arising from tribunal decisions or further regulatory interventions may particularly benefit already privileged public sector employees. The costs fall on the taxpayer, and such mandates may undermine attempts to improve poor productivity performance. They will also make it still more difficult for private employers to compete.

We are not in a position to evaluate the benefits and costs of particular working arrangements. But neither are politicians and civil servants. Employers and employees, negotiating in the ‘particular circumstances of time and place’, are better suited to undertake these evaluations. Government should take its hand from the tiller and allow businesses and employees to come to arrangements that best suit their own needs and requirements.

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