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Major's EU employment fears `overblown'

John Major's claim that signing the European Social Chapter would put 500,000 people out of work in the UK was challenged in an independent report yesterday.

The Prime Minister's assessment was "overblown, inaccurate and unresearched", according to John Philpott, director of the non-partisan think-tank the Employment Policy Institute.

EU directives could in fact increase the adaptability of the UK workforce.

The report argues that introducing employment protection legislation on the continental model to the UK would not necessarily destroy jobs. Although it might have this effect in low- wage, hire-and-fire industries, in some sectors it could actually create jobs by raising productivity.

However, the Labour Party should consider very carefully the risk that the impact of the Social Chapter would be extended in areas subject to qualified majority voting rather than a unanimous decision. These include health and safety, working conditions and equality. But the study argues that the trend on the Continent is towards less rather than more regulation in these areas.

"There is no clear evidence to suggest that employment protection raises total unemployment," Mr Philpott writes. The Prime Minister's claim was not backed by serious analysis.

Indeed, increased co-operation between employers and employees could make the labour market more adaptable and flexible than it is at present, if adopted sensibly. Better conditions could help improve the quality of the labour force.

The report accepts that any move to harmonise wages or benefits across Europe would damage UK job prospects. But it notes that pay, the right of association and right to strike are explicitly excluded from the Social Chapter.

Some matters covered by qualified majority voting, such as health and safety or working conditions, could impose extra costs on British employers, and Mr Philpott says a Labour government should ponder this.

The potential for job losses as a result of imposing additional employment standards is greatest among small firms, but the report points out that the Social Chapter is explicit about the need to avoid harm to small and medium-sized businesses.