Labour’s plans to introduce a raft of employment rights under its ‘new deal for working people’ should be watered down according to the new president of the Confederation of British Industry.
Rupert Soames told the Financial Times that the UK needed to resist a “European model” of employment rights and avoid excessive regulation.
He told the newspaper the CBI was providing “private feedback” to Labour on its policies and it wanted to help the party understand the “unintended consequences” of its proposed reforms to workers’ rights.
Last week, at an event Labour hosted to woo big business, party leader Keir Starmer said he wanted to be “crystal clear” that Labour would “level up workers’ rights in a way that has not been attempted for decades”.
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In its new deal, a Labour government would ban zero-hours contracts, end fire and rehire, and improve sick pay – with an employment bill promised in its first 100 days if elected.
But following a tumultuous year for the business lobbying group, which saw a sexual misconduct scandal and numerous large employers suspending their membership, Soames said the CBI still had an important role as a conduit between business and politicians.
“You need to have someone providing Google Translate between business and government,” he told the FT, adding “There’s no point having a bare-knuckle fight with government”.
Speaking after Labour’s business conference, Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation, said: “Labour must follow through on its commitment to partner with business and job market experts to lessen ongoing skills and labour shortages, economic inactivity and exploitative contracts, and thereby deliver better work, better productivity and growth.
“But this must include a robust debate of why retaining a flexible labour market is as much pro-worker as pro-business. This is evident in our recent research which found a staggering demand for flexible work – with 25.7 million temporary and contract placements made by recruiters in 2022.”
Zero-hours contracts
While Labour has previously cited a long list of countries which have “banned” zero-hours contracts, including France, Germany and Italy, there is some debate about the effectiveness of such sanctions, both for employers and workers.
According to a 2022 CIPD report, the flexibility provided by zero-hours contracts can benefit students, people with fluctuating health conditions, those with varying and unpredictable caring responsibilities, older workers approaching retirement, and those who might otherwise struggle to work at all.
Shoesmith added: “Nowhere in the world has really banned zero-hours contracts which suggests a more nuanced, rather than knee-jerk, debate is needed about their future.
“We cannot overstate how much employers want to work with politicians on the roadmap to much-needed economic growth. This makes today’s promise of pro-growth policies by Labour, such as greater stability in taxation, helpful in unlocking employers’ confidence in investing and hiring in their own businesses.
Nowhere in the world has really banned zero-hours contracts” – Kate Shoesmith, REC
“Labour’s ambition to help small businesses must include reform of immigration, skills and training, as well as a broad review of public procurement rules. After all, more than four in five small employers with less than 50 staff are reporting shortages of candidates for their roles. This is a concern because they make up 99% of all business in the UK.”
A Labour spokesperson said its new deal for working people would boost “security at work, ensuring fair wages and modernising UK labour market regulations.
“This is part of our plan for growth, helping to break the cycle of low productivity, low investment and worker shortages. As a pro-worker and pro-business party, we engage with numerous organisations, who should be in no doubt that our new deal for working people will be a core part of our offer to the country.”
Duncan Brown, principal associate at the Institute for Employment Studies and reward management author, described Soames’ comments as “complete tosh”.
“The CBI is wrong. The low-regulation, low-pay, uber-flexible employment model has given 20 years of low productivity,” he said.
Soames also said there could be consolidation among the UK’s big business groups (the British Chambers of Commerce, the CBI, the Federation of Small Businesses, the Institute of Directors, Make UK) and that he would “think it odd” if all five still exist by the end of the decade.
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