Seven in 10 bosses think workers’ rights bill will dent growth
Over seven in 10 bosses believe the government’s flagship workers’ rights overhaul will kibosh efforts to kickstart economic growth and lead to fewer new hires and more outsourcing of work abroad, fresh research has shown.
According to a poll by the Institute of Directors (IoD), 72 per cent of business leaders in Britain believe that, without changes, the bill will harm the government’s growth aspirations, with over half of those saying it would have a “strong negative impact” on the economy.
The survey is the latest in a growing line of evidence of UK plc’s reservations that the package to bolster workers’ rights will pose onerous bureaucracy on businesses, and leave them more exposed than ever to damaging tribunal claims.
Spearheaded by deputy Prime Minister Angela Rayner, ministers have branded the package, which includes broadly popular measures like banning “exploitative” zero-hours contracts and so-called ‘fire and rehire’ practices, the “biggest upgrade to rights at work for a generation”. It has also curried widespread support from unions and employment rights campaigners.
But several other changes within the overhaul have triggered stark warnings from employers. Most strikingly, all of the ‘big five’ industry bodies penned an open letter to peers in April, warning it would be “deeply damaging” for living standards. And in a similar letter on Wednesday, 127 bosses from the £60bn facilities management sector argued the bill posed the risk of “serious unintended consequences” on their sector.
Firms’ concerns have centred around the package’s especially contentious changes to statutory sick pay (SSP) and a host of new ‘rights from day one’ that the overhaul is poised to hand new staff.
Concerns around sick pay and workers’ rights from day one
Under the plans, eligibility for SSP will no longer be restricted to workers who earn more than £125 per week or those who have been ill for more than three days. And included in the batch of rights from day one are fresh entitlements to parental leave and protection from unfair dismissal, that bosses fear will lead to costly “vexatious” law firms.
The study from the IoD – one of the so-called ‘big five’ lobby groups which signed the letter to peers – also found bosses plan to respond to the package with measures that would sap economic activity from Britain.
Nearly half (49 per cent) said the workers’ rights bill, which is currently being debated in the House of Lords, would make them less likely to hire new staff, while over a third (36 per cent) would look to outsource roles or operations to other countries.
Roughly a quarter said they planned to make redundancies.
Alex Hall-Chen, the IoD’s principal policy advisor for employment, said that in conjunction with the recent rise to employer National Insurance Contributions, the workers’ rights bill is “significantly damaging business hiring intentions and confidence in the UK economy”.
“The research clearly shows that the bill will undermine the government’s key aims of securing the highest sustained growth in the UK and achieving an 80 per cent employment rate,” he added.
However, the poll, which surveyed 483 firms of various sizes, also found the extent of overhaul would trigger over half of directors to invest more into automation, in an attempt to cut out staff and boost productivity.
Hall-Chen branded the finding a “silver lining” that “may improve the UK’s stagnating productivity levels.
Andrew Griffith, shadow business secretary, said: “This survey shows that Labour’s Employment Rights Bill is having a devastating impact with seven out of ten businesses confirming it will block growth.
“If Labour had worked in business they would know their choices mean that British workers will lose their jobs to robots and foreign workers.”
A government spokesman said: “We’ve consulted extensively with business on our proposals, and we will continue to work closely with employers to ensure new laws work for them while putting money back into the pockets of working people.”