Labour warned Employment Rights Bill will damage jobs market
Labour’s Employment Rights Bill must be changed immediately to prevent the UK’s jobs market crisis from worsening, top business groups have warned Peter Kyle in a last-ditch attempt to secure growth-focused changes.
The government’s workers’ rights reforms have faced strong opposition from thousands of businesses across the UK, with bodies representing their interests claiming changes could have a “chilling impact” on hiring.
‘Day one rights’, which would allow Brits to sue employers for unfair dismissal for employment under six months, is seen as one of the top three key issues that worry business groups, Morning Wire understands.
Stringent rules that clamp down on zero hours contracts by forcing companies to offer guaranteed shifts could hinder firms’ capacity to offer flexible working, it is also argued.
The letter also raises concerns about new striking rights that could lead to “deteriorating industrial relations”, with the bill set to scrap a minimum 50 per cent turnout requirement for strike ballot.
It also eases requirements on the statutory recognition of a trade union.
The letter to the new business secretary, which was first reported by The Telegraph, was signed by leading figures at top business groups including the British Chambers of Commerce (BCC), Make UK, the Confederation of British Industry (CBI) and the Institute of Directors (IoD).
The Federation of Small Businesses did not sign the letter but it agreed with complaints made by other groups, according to reports.
Employment Rights Bill to jeopardise growth
Industry officials hope that Kyle will be more business-friendly and propose changes to the bill championed by Angela Rayner, who resigned as deputy prime minister over unpaid taxes.
Labour MPs were ordered to reject amendments to the bill brought forward by Lords, which would have partly addressed the three issues raised in the letter.
Business groups have called on the government to make immediate changes rather than retrospective changes via secondary legislation.
The government is also looking to promote growth-focused policies over six rounds of discussions with the Office for Budget Responsibility (OBR) ahead of the November Budget.
The OBR did not take a full view on the impacts of the Employment Rights Bill on the UK economy earlier this year at the Spring Statement but it said it suggested it would have a “net negative” effect.
Lower growth estimates could further damage the Chancellor’s small £9.9bn headroom, with a 0.1 percentage point reduction to forecasts likely to destroy it altogether.
OBR chiefs have reportedly warned Reeves that they will downgrade growth projections due to lower productivity forecasts, prompting the government to find other ways to lift growth in the UK economy.
Reeves is already on the backfoot as the Office for National Statistics (ONS) this week confirmed 142,000 jobs had vanished over the last 12 months.
Economists have widely pointed to the impact of higher employers’ national insurance contributions (NICs) as the cause for the slump in the jobs market.