Would scrapping the 48-hour working week be good for Brexit Britain’s economy?

It’s claimed that giving employers more flexibility and encouraging Britons to work longer hours would help the economy to grow. But is that plausible? Ben Chu investigates

There is no clamour from business to overhaul employment regulations (AFP via Getty)

The government seems to be considering using its post-Brexit freedom to diverge from European Union regulations by dismantling various rules which govern the workplace.

This, according to the Financial Times, includes scrapping the maximum 48-hour week as well as certain rules around rest breaks at work and holiday pay entitlement.

The proposals are clearly at an early stage and may not go anywhere, but it’s long been an argument among Brexit supporters on the right that one of the benefits of leaving the EU would be the ability to scrap such workplace rules.

In 2017, one unnamed minister told The Sun that: “This will give employers the added flexibility they will need once we have left the EU.” 

The government is wary of being seen to hit workers, especially as it was elected on the back of working class former Labour voters in the North. 

The new business secretary, Kwasi Kwarteng, said this week, in response to the FT report, that: “We want to protect and enhance workers’ rights going forward, not row back on them.”

Yet in 2012, as a freshly-elected Tory MP, Kwarteng – along with now  fellow Cabinet ministers Liz Truss, Priti Patel and Dominic Raab – wrote in a book called Britannia Unchained that: “The British are among the worst idlers in the world… We work among the lowest hours.”

Parking the question of whether these plans will become government policy, it’s worth asking whether the mooted proposals would actually deliver the economic benefits that are sometimes claimed for them.

The maximum 48-hour week was introduced as part of the EU’s Working Time Directive, which was implemented in the UK in 1998.

Working Time Regulations

Basic rights at the moment

• A limit of an average of 48 hours a week over a 17-week period which a worker can be required to work
• A limit of an average of 8 hours work in 24 hours which night workers can work
• A right to 11 hours rest a day
• A right to a day off each week
• A right to an in-work rest break if the working day is longer than 6 hours
• A right to 28 days paid leave for full-time workers per year

In addition, this directive requires daily breaks during the working day and 28 days of paid leave a year.

Prior to its introduction, there were no general regulations in the UK relating to working time or entitlement to leave.

When considering the impact of withdrawing the rule, it’s vital to recognise that individual workers are currently able to opt out of the 48-hour limit if they want to, via a written agreement with their employer. There are also a number of exemptions, including for company directors, executives and certain transport workers.

John Springford, of the Centre for European Reform, has pointed out that official data shows that, despite the opt-out, a relatively small fraction of UK workers currently put in more than 48 hours a week.

“It follows that if Britain left the EU and abolished working time rules, the resulting boost to hours worked and national income would be modest,” he says.

Yet even with the opt-out and the exemptions, the trade unions argue the regulation helped to reduce the number of people working excessive hours in the UK.

The Trades Union Congress (TUC) credits the introduction of the rule with reducing the number of employees working more than 48 hours a week by 700,000 since 1998.

It’s rather hard to be confident about such estimates. There was a long trend of falling average weekly working hours before the introduction of the directive, so some of the reduction might have happened anyway.

Yet it’s plausible that the directive reinforced and preserved the existing trend.

And the unions also highlight what they regard as other highly beneficial elements of the directive, such as the statutory right to paid annual leave.

The TUC calculates that this resulted in 2 million people (many of them part-time female workers) receiving it for the first time.

Regardless of the debate about the direct impact of the directive, relative to otherwise, the fact is that most employers are not pressing for a dismantling of the working time regulation.

“There is no clamour from business to overhaul employment regulations,” says Matthew Fell, policy director of the CBI.

The UK labour market already provides a good balance between providing reasonable protection for individuals and flexibility for employers

Rachel Suff, CIPD

Research by the CIPD, the professional body for human relations, found six in 10 employers reporting that the working time regulations were  necessary to protect the health and safety of workers. Only one in eight disagreed.  

“The UK labour market already provides a good balance between providing reasonable protection for individuals and flexibility for employers,” says Rachel Suff of the CIPD.

This is borne out from work by the OECD that shows the UK already has a very light burden of employment protection relative to most other developed nations, casting doubt over how much economic benefit would flow from reducing protections further, even if that were socially desirable.

Does this mean that there are no workplace regulatory reforms that would help the UK economy?

Some experts have suggested that some administrative burden could be lifted from firms when it comes to recording all hours worked by each employee, not just overtime or excess hours. But it’s hard to present this – or other tweaks such as a cut in accrued holiday rights – as economically transformative.

For businesses, there are many much bigger priorities than reforming workplace regulation, from infrastructure investment to tax reform and training. And trade unions argue that the Covid pandemic – in particular the major gaps exposed in the coverage of Statutory Sick Pay and the plight of a swelling group of low-paid self-employed – has shown the need to strengthen workers’ protections and rights, not to consider ways to erode them.