TUAC has published a comprehensive policy brief dismantling the resurgent push for labour market deregulation across the OECD, marshalling a wide body of evidence, including the OECD’s own research, to contest the claim that weakening employment protection delivers growth.
Trade unions argue that robust job protection does not raise unemployment or suppress employment. Instead, it shapes the pattern of labour market adjustment – cushioning downturns rather than dictating whether people work. The OECD’s Employment Outlook 2025 reinforces this: voluntary job moves drive productivity, while involuntary moves, which weaker protections would multiply, largely cancel those gains out.
TUAC rejects the argument that strong protections for permanent workers fuel labour market duality, highlighting that duality is driven by the gap in protections between contract types – a position the OECD itself has endorsed. Spain’s 2021 reform, which curtailed temporary contracts in favour of permanent ones, offers a case in point: the OECD assessed the shift as a step in the right direction.
Deregulation is equally inadequate as a path to formalisation. Globally, around two billion people, over 60 per cent of the employed population, work informally, and most have no employer at all. Own-account workers, domestic workers and smallholder farmers gain nothing from lighter compliance costs. Trade unions insist they need an extension of rights and social protection, not an erosion of standards for those who already have them.
The benefits flow upward even where reforms appear to boost productivity. An OECD study of Italy’s 2015 reform found that productivity in affected firms rose by an average of 1 per cent annually, yet the labour share fell by up to 0.7 per cent – with gains accruing to employers rather than workers. Nor does the evidence support the contention, aired in the OECD’s December 2025 Economic Outlook, that Europe’s employment protections explain its lag in AI investment, with OECD analyses pointing instead to capital markets, public investment and innovation ecosystems.
Weakening employment protection is a political choice with clear winners and losers. The evidence shows the winners are employers and shareholders, not workers.
In a companion article for IPS Journal, TUAC makes the case that the stakes extend beyond economics – employment security underpins health, family formation and trust in democratic institutions.
Read the TUAC policy brief: “Employment Protection Works: The case against labour market deregulation” (PDF).
Read the article in IPS Journal: “Fewer rights, bigger profits”.
