Week in Business: Labour’s jobs madness as employers urge change of plan
Business Secretary Johnny Reynolds was so fed up with people criticising him for never having run a business that he bought himself a whopping great steel mill in Scunthorpe.
Now firmly a member of the boss class, will he have sympathy with the business chiefs who this week begged the government to rip up their looming Employment Rights Bill?
Ministers insist that their reforms to employment law will be good for business, good for workers and good for the economy.
Actual employers, on the other hand, warn that the measures – largely written by trade unions – will be deeply damaging to economic growth and will worsen living standards in the UK.
Will worsen living standards.
We’ve been critical of large parts of the Employment Rights Bill ever since it first reared its head and we certainly haven’t been alone in that. Employment lawyers, small business owners, large employers – basically anyone who knows what they’re talking about – have warned that however well-intentioned Labour’s reforms are, the consequences will not be a workers’ paradise but a private sector entangled in mountains of red tape, facing legal challenges at every turn and deterred from creating jobs.
Last night, City PM got hold of a highly unusual letter that has today been sent to every member of the House of Lords.
Signed by the CBI, the Institute of Directors, the Federation of Small Business, the British Chambers of Commerce and Make UK, the manufacturers’ association, the letter is in effect signed by tens of thousands of employers across the full spectrum of business sizes, geographic location and sector. In other words, it carries some serious weight.
And this isn’t just special pleading for an easier ride; the letter is surgical in its critique of the proposed changes to employment law and constructive when it comes to how changes should be made that support the aims of the Bill without the devastating consequences many businesses fear.
As the authors note: “For us the challenge has never been what the government wants to achieve, but the unintended consequences of how they implement it.”
Businesses will be put off hiring new staff
As the Bill works its way through the House of Lords, businesses are urging parliament to make specific changes.
For example, they warn that the policy of protecting employees from unfair dismissal from day one of a new job “will make businesses more cautious about creating new jobs when taking the risk of trying to grow, because dismissals from day one will count as redundancies and could trigger collective consultation requirements.”
Furthermore, the proposal to enshrine in law a legal right for workers to be offered a guaranteed hours contract instead of a flexible or zero-hour contract will cause havoc among employers whose demand for staff is seasonable or unpredictable – and it will penalise the very people for whom flexible or period work is essential.
As the letter says, this change “provides no clear benefit to workers” – and the business groups suggest the reasonable alternative that people should have the right to request a contract of guaranteed hours.
The letter goes on to set out very specific concerns about changes to the power of trade unions, changes to statutory sick pay and changes to the rules around dismissal of employees and changes to contracts or terms.
The authors conclude that unless the Employment Rights Bill is amended to take into account the perspectives of employers, then it will “have a deeply damaging” impact on the government’s growth missions and will simply stifle innovation and productivity.
In short, Labour MPs and highly paid trade union officials can sit back and think it’s a job well done, that they’ve put a stopper over the capers of those dastardly capitalists, the people who will suffer from this Bill are those who do not get a job, who do not get a foot on the employment ladder, who do not move from welfare to work because the new laws make it harder, more complicated and more risky to take on new staff.
And so while Jonathan Reynolds currently poses as the saviour of British Steel and the thousands of jobs supported by that industry, the government’s commitment to pushing through their Employment Rights Bill demonstrates that ministers still haven’t got a clue about the realities of the private sector and the combination of risk, investment, time, money and uncertainty that goes into the creation of every single private sector job.
Employment reforms ‘madness’
And of course the real madness here is that having increased taxes on employment, having increased the cost of employment and now, having insisted on these confidence-crushing and job-destroying reforms to employment law – ministers say they’re on a mission to get people back into work, off welfare and into jobs.
Which jobs? In bars, shops and restaurants? Forget it, they can’t afford it. On a flexible basis to gain skills and confidence? Not under these reforms.
Even the most public-spirited and benevolent employer will think twice about giving someone a chance because the government has made it illogical – and very high risk – to do so.
At this time of maximum economic uncertainty, the government’s number one mission should be on supporting businesses and supporting job creation – what could matter more? Instead they’ve made life for employers harder, riskier, more expensive and more complicated.