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EU Regulation harms the job prospects of young women

The European Union (EU) is drafting plans to massively increase small businesses costs. The EU plan to extend women’s right to full maternity pay from six to eighteen weeks. A grand move you might say. How could anyone disagree? But consider it in more detail and its effects are more pernicious.

This move will lower the incentives for small businesses to hire women of child bearing age further reducing womens career prospects. It will also endanger the future of many small businesses struggling to survive during the current recession. In short, it is the wrong move, at the wrong time and must be stopped.

Currently UK maternity leave standards exceed the EU minimum. British mothers are entitled to a years leave, whereas the EU only requires its member states to give mothers a right to fourteen weeks leave. In the UK, over nine months of maternity leave, is paid provided the woman has worked at the company for six months or more. Six weeks of this leave are paid at ninety per cent of full pay with thirty three weeks then paid at a rate of £117.18 a week. This thirty three week period is called Statutory Maternity Pay (SMP). The remaining thirteen weeks are unpaid. Under the new EU proposals mothers would be entitled to eighteen weeks at full pay. In addition the British Government is looking to increase statutory maternity pay to fifty two weeks as of 2010. So what will be the effects of these policy changes?

There will be four main effects brought about by these changes. Firstly, small businesses face an increase in the amount of pay they have to provide mothers with and the duration of such payments i.e. a mother’s current right to ninety per cent of full pay for six weeks will be increased to a right to one hundred per cent of full pay for eighteen weeks. Furthermore, as a spokesman from the Federation for Small Businesses said, we should also consider that “Not only would they have to pay the employee; they also have to pay for a replacement." These replacements are temporary by nature and thereby often cost more than the rate the existing employee was earning. In the current recession increasing costs on struggling small businesses is not the best idea. The EU should in fact be looking for ways to reduce such costs.

Secondly, the Government subsidises statutory maternity leave so it will now face a higher maternity leave bill. While under current treasury rules firms can reclaim some of the costs of SMP from the Government it is unclear whether this arrangement will continue if the EU extends the amount of statutory maternity leave. If the Government insists on implementing its proposed increase in the amount of maternity leave to fifty two weeks, it will have to finance an additional thirteen weeks of SMP. In addition if the current entitlement to full pay is tripled from six to eighteen weeks then the Government will either have to subsidise this which means high taxes or pass the costs off on to businesses which means higher costs for consumers. Either way many ordinary Britons will be worse off as a result of these changes.

Thirdly, employers are fighting back by refusing to hire young women as full time employees. Instead employees are hired on fixed term contracts which are then renewed as and when necessary. This means the employee can be sacked more easily and has less employment rights then their full time equivalent. Further reducing the job security of young female Britons will not be welcomed.

Fourthly, some employers are beginning to refuse to hire women of child bearing age at all. Sir Alan Sugar, a British entrepreneur famous for starring in a successful British television series called the apprentice has said that many employers put the cv’s of women of child bearing age into the bin. A view also put forward by the head of the Equalities and Human Rights Commission, Nicola Brewer.

So the proposals of the EU and the British Government increase the cost to businesses, consumers and taxpayers. They also reduce the career opportunities for young women. These proposals need to be abolished and replaced with sensible measures to ensure both adequate maternity leave and the small business development and economic growth we all need to get through the current recession.

EU fails to abolish biofuel targets as food prices soar

The EU Parliament's Industrial Committee has restructured the EU biofuels target to account for its impact on food prices but still refuses to call for its abolition. This target must be abolished now as it serves little purpose. It raises food prices, causes greater pollution and will not be achieved.

The current EU target for increasing the use of biofuels in transport is to make it 10 per cent of fuel by 2020. This general target remains. However, the Industrial Committee has altered the interim target to 5 per cent by 2015 with 20 per cent of this to be made up of "new alternatives that do not compete with food production." This means either electricity from renewable sources, hydrogen fuel cells or biofuels that are made from algae, waste or other nonfood forms of vegetation. Therefore the commitment has been restructured – not reduced and not abolished. This is a step in the right direction but far too timid.

No Committee has the power to abolish the target on it's own. Abolition would require a debate in Parliament and the agreement of the EU members now signed up to it. However, after the report of the Parliament's Environment Committee in July we could have expected a little more. The commitment had already been watered down when in July 2008 the European Parliament's Environment Committee recommended a lower medium target of 4 per cent rather than 10 per cent and a review of the target in 2015. The time is ripe for a committee to recommend its abolition because biofuels pollute more and increase food prices for EU consumers.

Many biofuels pollute more than the forms of energy they replace. The World Land Trust an international conservation trust described the promotion of biofuels as a disaster stating that “Whilst there may be short-term economic arguments for biofuels like gasohol and biodiesel, let us not be taken in by the green-wash. For climate change and for biodiversity they are a disaster” see here.  The Trust has also published an extensive report on how biofuels are set to increase emissions see here.

Growing biofuels is also acknowledged to increase food prices for European consumers. This is because they take land out of agricultural production. High food prices affect all EU citizens but the poorest most. The World Bank estimates that 75 per cent of the increase in food prices between 2002 and 2007 is due to the increase in biofuels see here. UK consumers have experienced an 8.3 per cent increase in food prices in the last 9 months according to a BBC study.

European Consumers will welcome any moves by the EU to abolish this unnecessary target which creates more pollution and increases the costs of our groceries.  It would cost the EU nothing to take this step but it would benefit all EU consumers. The European Parliament must abolish this target now. This does not mean we want it restructured or reduced. We, European TaxPayers want it abolished now.