Just before Christmas the European Commission delivered its long-awaited Green Paper on the Evolution of Labour Law. And despite a few trembles of anxiety from the UK's business community, in the end the news was not half as bad as expected.

The key question is: should labour law evolve into a lean and competitive form equipped to compete in the 21st century, or will it devolve into a bloated and indolent sloth?

The good news is that the Commission accepts the need for greater flexibility and even asks how the Working Time Directive could be changed to achieve this. Of course, good news from the Commission is usually tempered by a fair share of bad news and the Green Paper is no exception. Top of the list is the idea of a "floor of rights" for working conditions while the legal definition of self-employed status is also questioned, suggesting a trend towards re-classifying the self-employed as "employed".

So why does the Commission need to stick its nose into relations between employer and employee? Well, despite EU interference over the last few years, there are still a remarkable number of differences between member states in the area of labour law.

French labour laws are rigid and inflexible compared to those in the UK and it is no coincidence that the French were strongly in favour of the Commission's plan for additional legislation. While differences exist between member states, small businesses all over Europe need the same things to grow and prosper: flexibility and a light regulatory touch.

Europe needs this more than ever. If every small business in the EU created just one more job, the Continent's unemployment woes would be resolved. Employers and employees alike are calling for greater employment flexibility, and the benefits are irrefutable. Despite this, the trade union movement will fight hard for more legislation. It will be left to business representatives to make the case for labour laws that match the demands of the 21st century.