10 January 2012

To employ or to contract?

It is heartening to potentially see emerging to legitimacy in contemporary polemics the notion that employment, with all its attendant rights and long term benefits for the employed, may not be an optimal relationship for the encouragement and fostering of success and prosperity in small business.

This article, "The Growth Agenda - the Self Employment Option" by Dr Madsen Pirie of the Adam Smith Institute advocates for "all small and medium enterprises to treat their workers as self-employed people under contract". He argues that "employers could take on extra people on a self employed basis without imposing any additional burden on themselves".

This argument strikes me intuitively as quite compelling. Inevitably any discussion of possible changes to the existing structures for workers' rights can provoke unnecessarily over emotional responses from the entrenched conservatism of trade unions and their enablers in protecting prevailing guild privileges, but in principle this idea seems to have a lot to recommend it, if the frame of reference is for the well being and prosperity of the whole economy, not just the quite specific sectional interests of large employer and large employee associations.

It is interesting to observe the UK Conservative government potentially entertaining such a far reaching reform, whilst at the same time the Australian Labor government seems intent on discrimination against out-sourcing and independent contracting by encouraging the taxation system to create heavy disincentives to contractors who might further threaten the long term drop in the numbers of workers who join trade unions.

This looks like yet another example of how the allegedly "progressive" side of politics is "regressive" in reinforcing authoritarian legal rigidities, whilst the allegedly "conservative" side of politics is  "progressive" in advocating for increased freedoms and flexibility in labour markets.

It seems, in Australia at least, to continue to support the "progressive" side of politics, is, ironically, to be an enabler of the preservation of institutional inflexibilitiy in existing workplace relationships and against the interests of a dynamic and flexible workplace environment susceptible to change and progress in overall societal prosperity.

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