Letter: OECD on jobs: adaptability, not flexibility, is the key

Sir: Vincent Cable ('Wrong readings of the Chapter', 7 June) sees only higher costs as a result of the Social Chapter, with detrimental consequences for jobs. But this is a very static view of the impact of measures that aim to give workers more rights and security.

First, evidence cited by the OECD suggests long-term relationships are crucial to future productivity growth. Legislation that pushes firms and workers towards working together and feeling commitment to each other is therefore likely to produce dynamic gains over the medium term.

Second, while we can all agree that flexibility will be a key to competitiveness in the globalised economy, it is not at all clear that this should be equated with a fully deregulated, short-termist labour market. Many economic studies suggest that growth performance has been stronger in countries usually characterised as having a social, not a free, market. The very quick recovery of Germany from its recession shows that loose talk about the demise of the 'regulated' option is daft.

For these reasons, Dr Cable's implication that one can only have decent rights for workers after one has become a strong economy, and that the Social Chapter simply represents the stronger EU countries trying to force higher labour costs on the weaker, misses a large part of the argument. The Social Chapter is needed to create a fair society. It is also an important ingredient for creating a stronger British economy.

Yours sincerely,

DAN CORRY

Institute for Public

Policy Research

London, WC2

7 June