The new government’s plans for an employment rights bill have been given support from the Resolution Foundation think tank, which believes its proposals “have the potential to make real inroads in the problem of insecurity at work, and would particularly benefit low-paid workers, who bear the brunt of labour market insecurity”.
The Foundation pointed out that protections for low paid workers were far worse in the UK than in many other well-off countries. It examined four measures in-depth that it felt had the potential to make the most impact: unfair dismissal, zero-hours contracts, statutory sick pay and the minimum wage.
Its latest Low Pay Britain report acknowledged that major reform ran the risk of “negative employment effects”, namely making firms too conservative to employ enough people. However, the success of the minimum wage should provide reassurance to employers, the authors said.
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There was an understandable lack of clarity in government plans. For example, how did day one rights tally with the maintenance of probation periods? The RF was critical of the government for not promising to raise the level of statutory sick pay, preferring instead to extend the number of those who could get it.
The think tank was also unimpressed by ministers’ language around the minimum wage, which sounded ambitious before the election but had now been scaled back to only providing a policy for 2025-26. The report authors wrote: “In practice, the government’s policy for the National Living Wage (NLW – the adult-rate minimum wage) in 2025 is much the same as the previous government’s: the NLW will most likely rise in line with average earnings next year, with the ‘bite’ (the level of the NLW compared to median hourly pay) maintained at two-thirds of median hourly pay.”
The Foundation argues that the main beneficiaries of the new government’s policies will be low-paid, younger workers. All four of the key reforms apply most strongly to the hospitality sector, it said, the sector with the highest proportion of zero hours workers (19% as opposed to 3% across the wider economy). Such sectors were most likely to push back against the plans, but the Foundation urged ministers to focus on the benefits of the polices to people and regions – sectors growing more slowly was not a sufficient reason to abandon a policy, the research authors said.
The report was not greeted in its entirety by the Recruitment and Employment Confederation’s deputy chief executive Kate Shoesmith. She argued that it included “outdated assumptions”. She said: “The workforce has changed dramatically since Labour was last in power and it would make sense for the government to conduct a long-overdue workplace employment relations study to provide the evidence-base for a robust workforce strategy. And to stretch planned new regulation of the labour supply chain to cover relatively new actors such as umbrella companies and joint employment models.
“Without these, we risk outdated assumptions such as in today’s think-tank report determining the future working lives of the one million temps who are placed into work in the UK every day. The reality is that flexible temporary work is giving people confidence to return to work or the skills they need to get into work and then progress, helping businesses manage workloads efficiently, and for entrepreneurs get their startups running.
“This is why a continuation of the new government partnership approach with business and industry is vital to achieve a balance between individual people’s increasing desire for flexibility and employers’ increasing demands for a versatile workforce.”
But while employers put the emphasis on flexibility, the Foundation put more onus on the need to end the insecurity afflicting low-paid workers, thus bringing us more into line with other countries in Europe. The research authors wrote: “It is the UK’s low-paid workers who bear the brunt of workplace insecurity. Eight per cent of low-paid workers (defined as workers with hourly pay in the bottom fifth of the earnings distribution) are on zero-hours contracts, versus 0.6 per cent of the highest paid.”
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