Unemployment continues to stay at record lows but these figures are deceptive. Over the past two years the majority of employment growth has been driven by the public sector which has been on a tax-payer funded hiring spree. So far this growth has managed to mask a severe slowdown in the private manufacturing and service sectors and in the City of London in particular.

Though this development is itself a concern, my greater anxiety lies with the difficulties that are being created for small businesses, especially those with fewer than twenty employees.

It is clear that our government sees the nation’s current economy in buoyant shape especially in comparison with our large European neighbours such as France and Germany which have struggled in recent years. The Chancellor in his recent budget gave full voice to his enthusiasm for the success which flexibility has given to this country’s financial outlook. Yet my concern is precisely in the outlook for employment flexibility amongst smaller businesses which will be the vehicles for jobs growth in future.

The new Employment Act came into force only on April 6th this year so we have yet to see its results on employment in general but there are many in small businesses who view the wide-reaching changes to maternity/paternity leave, flexible working rights and workplace resolution procedures with anxiety. There are also many who see problems being created for the employment of young women should there be a marked downturn in the economy with the inevitable increase in joblessness.

During the past thirty years there has been a huge growth in flexible work practices, driven by the changing requirements of both employers and employees. In 1979 women comprised 40% of the total workforce as opposed to 47% in 2002. It is estimated that within a few years there may even be more women than men working in UK plc.

The growth in the female workforce has also been matched by a massive rise in part-time opportunities. By 2002 this type of work accounted for 24% of all employment opportunities, which compares to 19% two decades ago. Indeed with the minimum of government intervention, the UK has been able to achieve one of the most flexible and family friendly economies in the EU.

There is a very real danger that by regulating in this area the Government may well make it more difficult for women to enter the workforce. It is entirely possible that employers, particularly small businesses, fearful of running into a wall of red-tape and potential legal liability may seek to avoid hiring women with caring responsibilities.

The concern then is that more unemployment and anti-discrimination legislation will be demanded which will increase the scope for bad feeling, drive up costs and further undermine a previously well functioning part of the labour market.

Employment tribunal claims are rising each year. Between 1997 and 2001 such claims rose from 88,910 to 130,408 with those affecting small businesses with less than twenty employees being particularly hard hit. Sadly it seems that we are developing a less contented and less harmonious relationship between employers and their employees an exactly the opposite which we should hope for.

As the co-owner of a small business myself before entering parliament I am fully aware of the impact that any long-term absence from work of even the most junior of staff can have on a striving organisation. The concept that all employers are wealthy people and must be given the social responsibility of keeping up the nation’s population growth is frankly laughable, especially during economic downturns.

In three years after these new rights from the recent Employment Act have come into force, I hope we will undertake an extensive UK economy-wide examination sector-by-sector as to the effects on competitiveness of these provisions and the flexible working regulations with a view to deregulation.

Legislation made in times of plenty can prove to have created problems during much tougher times for those the legislation set out to help and protect in the first place. My fear is such will be the case unless there is a sensible compromise and all companies with twenty employees or fewer allowed to be exempt from such challenging employment legislation.