Rupert Soames, president of business lobby group the Confederation of British Industry (CBI), was this week driven to acknowledge that improved workers’ rights is “really good for people who are employed”.
This matters because bolstering workers’ rights is central to the Labour Party’s New Deal for working people.
This pledges sweeping but necessary changes including stamping out the exploitative use of zero hours contracts, ending the ability of employers to fire and rehire workers on lower wages, and scrapping the current wait for up to two years for basic workplace protections.
Such reform is desperately needed.
Rise in insecure work
TUC analysis of official figures shows that by the end of 2022 there were around 3.9 million people in insecure employment, a rise of 23 per cent since the coalition took office – almost double the rise of 12 per cent in overall employment growth.
As Soames, having recently spent eight years as chief executive of outsourcing giant Serco, will be well aware: insecure work disproportionately affects groups of workers who are already discriminated against in the workplace, such as Black and minority ethnic (BME) workers.
Over half of those living in poverty are in working households – and this rises to three quarters of children living in poverty.
Even the current government promised 20 times to introduce an employment bill. But the pledge remains unfilled.
Meanwhile, the flawed idea that weak workers’ rights means a stronger economy and higher productivity has been tested to destruction.
As the Resolution Foundation has pointed out: “Labour productivity grew by just 0.4 per cent a year in the UK in the 12 years following the financial crisis, half the rate of the 25 richest OECD countries (0.9 per cent)."
Moreover, things are getting worse not better. Economic growth is flatlining with the country teetering on the brink of recession.
The relentless undermining of wages and incomes has repercussions on spending in the economy, with household consumption failing.
This is why Richard Walker, boss of grocery chain Iceland, switched support to Labour citing concern about the impact of the rising cost of living on their customers.
Higher pay and greater security are clearly in the interests of both workers and businesses, for they mean more spending and more revenues for business.
Soames warned that “European model” of stronger worker rights, while benefiting those in work, is “really bad for people who are unemployed because companies are terrified to take them on”.
This suggests some in business are oblivious to the events of the past decade or so.
The Marmot review, for example, recognised that insecure and poor quality employment is associated with an increased risk of physical and mental health worsening. That in turn leads to absence due to illness, and worklessness.
No wonder businesses continue to complain of staff shortages.
Indeed his language is reminiscent of the apocalyptic and entirely inaccurate warnings that a national minimum wage would lead to two million more unemployed.
The incoming Labour government in 1997 was right to disregard claims from the Right that the minimum wage would cost millions of jobs. Now there is a wealth of evidence, over 25 years of the minimum wage, that it has protected the lowest paid with no employment effects at all.
It should take unevidenced claims about the New Deal in the same spirit.
Behind the times
While some in the business lobby are dragging their heels, previous advocates of unconstrained free markets now advocate reform.
The OECD’s 2018 Jobs Strategy finally put to bed its long standing celebration of flexibility and market fundamentalism.
“Countries with policies and institutions that promote job quality, job quantity and greater inclusiveness perform better than countries where the focus of policy is predominantly on enhancing (or preserving) market flexibility,” it said.
In the UK, the Institute for Fiscal Studies warned that: “Higher earnings inequality, with low real earnings growth, and a very different labour market from 40 years ago have placed the world of work in a much more unequal and divisive place. To halt or reverse this trend requires significant attention be devoted to ways to restore and reinvigorate real earnings growth and to generate decent jobs with good career opportunities in an inclusive way”.
A radical and effective programme is long overdue both for workers – whether currently in employment, looking for work or will be joining the jobs market in future – and for the wider economy.
As TUC general secretary Paul Nowak told the CBI conference last year: “Decent employers will recognise the promise of Labour’s economic reset and work with unions to boost productivity, skills and security at work.”
Now is not the time for foot-dragging.
The economy needs a major reboot and the opponents of change need to get out of the way.
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