Investor Luke Johnson slams Labour’s ‘socialist fantasy’ workers’ rights reform
Revolution Bars’ newly-appointed chair and seasoned investor Luke Johnson has criticised Labour’s proposed workers’ rights overhaul, calling it a “socialist fantasy.”
Labour is preparing a sweeping reform to tackle the UK’s “culture of presenteeism,” including a ban on “exploitative” zero-hours contracts and day-one employment rights. The government argues the changes will drive employee productivity.
However, Johnson, who co-founded private equity firm Risk Capital Partners, told City PM that the reforms are not necessarily going to improve Britain’s sluggish productivity levels.
“I think that’s a socialist fantasy,” said Johnson. “It’s a wild and unsubstantiated assumption, and the risk is it does the opposite.”
“In normal circumstances, businesses and their employees are free to do those things anyhow. I’m sure bosses and companies would have such arrangements in place if they felt that they would enhance productivity,” he added.
“Every company wants to improve its productivity, and I’m sure a lot of employees would like to see the company’s productivity increase so they are more profitable and can pay them more.”
His comments come after business secretary Jonathan Reynolds argued there are “real economic benefits” to more flexible working.
“Good employers understand that their workforce, to keep them motivated and resilient, they do need to judge people on outcomes and not a culture of presenteeism,” he told The Times on Monday.
A new employment rights bill is set to be tabled in Parliament in October, but specific measures remain unclear.
Earlier this year, the Office for Budget Responsibility (OBR) flagged the UK’s post-financial crisis productivity slowdown as “catastrophically bad” for the economy.
Johnson also blamed the shift towards remote work, particularly since Covid-19 pandemic lockdowns, for stalling productivity.
“Having had extraordinary policies like furlough, I’m not convinced that some workforces, some individuals, at least, still have the same work ethic they used to,” he said.
Business groups have warned that Labour’s proposed workers’ rights reforms could increase costs for already struggling firms and make them less inclined to hire.
WPP founder Sir Martin Sorrell has also said that experimenting with the working week will not boost UK productivity.