Measures to facilitate legal remedies and increase penalties should be accompanied by efforts to strengthen the capacity of the labour inspectorate to monitor and detect infringements, for example by increasing responsibilities and resources (including the number of inspectors), innovative methods of inspecting people working at home/on platforms (e.g. , new technological tools), and training. Some countries (e.g. Ireland, Spain and Greece) also target inspection efforts in specific sectors or geographical areas known to be more likely to be bogus self-employed (OECD, 2019[2]). The additional costs involved must be weighed against the potential revenue from the collection of taxes and social security contributions lost due to misclassification. Social and labour arbitrators also face these issues – see, for example, Autor et al. (2017[28]); Ichino and Pinotti (2012[29]); Breda et al. (2017[30]). With regard to the detection of erroneous classifications of workers, given the real ambiguity of the status of workers revealed in many court cases, it is not surprising that apparently similar situations within the same jurisdictions have led to different results (Davidov, Freedland and Countouris, 2015[6]). This attitude may not be ideal for companies and workers.
Employers would face a relatively high level of legal uncertainty and possible unexpected changes in legal standards, which would increase their potential costs. Workers would find that the enforcement of their rights depends in part on random events, such as: the assignment of the court to a judge with positive or negative attitudes. This suggests that the protection of workers should not depend solely on the granting of worker status by arbitrators, but should be extended, at least in part, to all situations where there is real ambiguity (see Figure 4.1 above). Our data shows that between 2008 and 2014, a total of 642 labour regulatory changes were approved in the 110 countries studied. Footnote 4 The number of changes approved each year increased globally during the first phase of the downturn, from 61 interventions approved in 2008 to a peak of 147 in 2012. After 2012, the intensity of reforms decreased, broadly in line with the evolution of unemployment rates (see Figure 1 for more details by geographical region). The majority of interventions (55%) led to a reduction in the existing level of regulation. This is due to a general trend towards deregulation in developed economies – and EU Member States in particular – and a tightening of labour laws in developing countries. In particular, reforms to reduce protection against dismissal accounted for 66 per cent of the total in developed economies and the EU and 46 per cent in Central and South-Eastern Europe (CEEC) and the Commonwealth of Independent States (CIS) (see Annex 2 for the list of countries in each region). As shown in Figure 2, all other regions recorded lower shares of reforms to reduce protection against dismissal, ranging from 38 per cent (East Asia) to 15 per cent (North Africa and the Middle East). In addition, most reforms targeted the entire population, with 69 per cent of reforms completed and the remaining 31 per cent being two-stage reforms.
In addition, 92% of the reforms represent permanent changes in labour market legislation, suggesting that the crisis has led to long-term changes in labour market regulation worldwide. Overall, our descriptive results are consistent with trends described by traditional EPL indicators, including the OECD indicator and the Cambridge University Centre for Business Research (CB-LRI) Labour Regulation Index (CB-LRI) indicator (ILO 2015a). The course of reforms is the number of reforms that reduce labour market regulation, minus the number of reforms that strengthen it. It is calculated for each year and each country, regardless of the policy areas or characteristics of the reform. Looking at labour market reforms by policy area, most reforms were adopted in the areas of permanent contracts (30%) and collective bargaining (27%), followed by reforms of fixed-term contracts (13%) and working time (12%). Relatively less attention was paid to changes in legislation on other forms of work and collective redundancies (10% and 8% of the total, respectively).