Labour election victory: the implications for employers

What impact will the next government’s policies have on employers? Labour’s intentions come under the spotlight this week, in the first of three investigations into the main parties’ plans for life at Number 10. Guy Sheppard reports.

After 13 years in government, it would be easy to dismiss Labour as a party which has run out of ideas. With less than three months to go until the general election few of its new employment policies appear to be more than extensions of those that have already been implemented.

For some, this amounts to a distinct lack of vision. David Coats, associate director for policy at The Work Foundation, argues that none of the main parties is addressing where work fits into people’s lives. “Talking about a bit more flexibility here and there is something one should support, but it does not really address some of the more profound challenges we face,” he says.

Nick Holley, executive director of the HR Centre of Excellence at Henley Business School, says there is too much emphasis on micro-management of the economy. He says, however: “What I am not hearing is a coherent, forward-looking strategy about how we create a more flexible, high-growth economy.”

Committed to work

But employment and welfare reform minister Jim Knight insists there is an over-riding theme to Labour’s policies. “A Labour government is absolutely committed to work. That is why the party was formed. We will make economic decisions necessary to sustain the highest number of jobs possible,” he says.

Knight believes confidence in the economy is the main concern for employers. He acknowledges a clear divide between Labour and the Conservatives on whether public spending should be tightened sooner rather than later, to cut the budget deficit.

However, he says: “While there is still an absence of spending in the economy, from the private sector and consumers, it is important that the government is spending in order to keep the recovery. It would be a very dangerous mistake to turn off that government spending too fast.”

When cuts are implemented, Labour is likely to be much less prescriptive than the Conservatives. Knight praises private sector employers for using more flexible forms of working to curb the need for redundancies during the recession, saying: “I hope the public sector learns from the private sector in using some of those techniques.”

But Labour is not necessarily going to be an easier ride for public sector employers.

It promises to extend current equality duties imposed on the public sector, to include pregnancy and maternity, sexual orientation, gender re-assignment, age and religion or belief.

Dean Shoesmith, president (designate) of The Public Sector People Managers’ Association (PPMA) (see page 14), which represents HR professionals in the public sector, accepts the reasons for this, but adds: “It is getting that balance right so that it is not overly onerous. It might tie up more time and resources for public authorities to deal with those issues and, given we are likely to be facing a period of public sector retrenchment, that will make it even more challenging.”

Welfare reform

Knight argues Labour’s welfare reform programme has been a significant boost to employers, helping 500,000 people come off benefits and into work. He points to Local Employment Partnerships (LEPs), which match unemployed people with suitable employers, as one of several initiatives to expand the country’s talent pool. “Employers see there is a good business case for not going back to the view that unemployment is a price worth paying,” he says.

If Labour is returned to power, a much broader range of employers will benefit from LEPs, Knight says. “We are building on the success of LEPs to make sure every job centre has someone with specific responsibility to liaise with local employers, so we can be better in personalising our service to small and medium-sized enterprises.”

And, he says, a more tailored service from Jobcentre Plus will mean that employers can upload their vacancies much more easily as well as deal directly with someone who identifies with their recruitment needs. “In the situation we are in at the moment, where the market is very tight and you get overwhelming numbers of applications, we can filter them down to give employers a range of people who fit their needs,” he says.


Labour’s longer-term ambitions include increasing the number of 16- to 18-year-old apprentices, so that one in five young people will be taking up apprenticeship places within the next 10 years.

Like other commentators, David Yeandle, head of employment policy at the manufacturers’ lobby group EEF, is generally supportive of Labour’s job-creation schemes. But he says a key issue about upskilling young people is whether they will be adequately prepared for work: “If they are not, is there going to be enough support given to employers to manage these young people coming into the workplace?”

Knight insists the 2009 Apprenticeships, Skills, Children and Learning Act removes the risk of quality suffering at the expense of quantity. He says: “They (apprenticeships) have to involve a real experience of working alongside people who are experienced in doing the job.”

Older workers

One criticism of Labour’s job creation programmes is that they are heavily slanted towards the young. Ben Willmott, senior public policy adviser for the Chartered Institute of Personnel and Development (CIPD), says: “We think more needs to be done to help older workers. Our research shows older people are disadvantaged in getting back into the labour market.”

Willmott also argues that not enough emphasis is being placed on the development of people-management skills. He says: “For us, all three parties really need to identify the key people management skills that must be highlighted and marketed to business in order to underpin employee engagement, learning in the workplace and ultimately productivity. We think that is still a bit of a blind-spot.”

Another criticism of Labour is a commitment, given by Gordon Brown at the Labour Party conference in September, to raise the national minimum wage every year for the next five years. Yeandle says: “We have felt strongly for a very long time that we should take the level of the wage away from politicians. Increases should be based on a formula so politicians can’t interfere and use it for political purposes.”

He is also concerned at a suggestion from work and pensions secretary Yvette Cooper that the right of employees to request flexible working should be automatic from the first day of being taken on. “When an employee puts in a request for flexible working, they are supposed to say how they think it will work and how it could be organised,” says Yeandle. “It’s a bit difficult for employees to do that if they’ve only just started working for a company.”

There are clearly doubts about the practicality of some of Labour’s employment policies, but so far the party has come up with little to either greatly enthuse or concern employers. And any period of calm is likely to be welcome, according to Yeandle. He says that following an “avalanche of legislation” since Labour came to power, it is vital that nothing more be done to destabilise the business environment.

Legal implications of Labour’s new policies

Labour is committed to narrowing the gender pay gap through increased transparency. The Equality Bill will mean that from 2013, employers with 250 or more employees could be required to report pay differences if the government feels insufficient progress on the issue has been made.

Lawyers question whether this will have a significant impact. Tom Potbury, senior associate at Pinsent Masons, says that simply producing statistics will not solve the problem. Catherine Wilson, employment partner at Thomas Eggar, agrees. She says reporting the number of disabled employees in each workforce was meant to encourage recruitment of disabled people, but there is no evidence this has had the intended effect.

Jonathan Exten-Wright, partner at DLA Piper, warns that employers would need to be wary of the statistics giving a misleading impression. “If there is a gender differential of 20% and you announce that, you need to go into quite a lot of explanation. People have some concern about how that transparency will be interpreted and how it is best presented so it is not misleading.”

Another Labour commitment is to “extend positive action in employment, political life and public appointments”.

Potbury suggests that the impact will be limited because employers will be wary of anything they feel could expose them to litigation. He says: “Where an employer has two candidates who are equally qualified, the employer can say ‘I am going to give the job to the person from the minority’. It is going to be a brave employer who does this because the other person is going to be unhappy.”

He also predicts this could give rise to employment tribunal claims.

In the Building Britain’s Recovery White Paper, published in December 2009, Labour set out its plans to launch a fit note to replace the old sicknote. Fit notes will come into operation from 6 April 2010, allowing doctors to certify employees ‘fit for some work’.

Exten-Wright says the ultimate aim is to change cultural attitudes towards sick leave, but adds: “It raises questions about how a doctor is able to define or explain their opinion that an individual is able to do some work. It’s going to require the doctor to give the employer some meaningful guidance.”

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