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21 February 2024

Labour should ignore corporate scaremongering over workers’ rights

The business lobby was wrong over the minimum wage and is wrong over the New Deal for Working People.

By Paul Nowak

Last Friday’s Times was plastered with a warning from some outriders in the business community to Labour not to “rush to rewrite staff rights”. With the party holding a formidable opinion poll lead, naysayers have started calling for its New Deal for Working People to be scaled back.

This transformative programme promises to ban zero-hours contracts, end the scandal of fire and rehire, expand collective bargaining and grant workers basic rights, such as sick pay, parental leave and protection against unfair dismissal, from the first day of a job.

But not everyone is happy. The lukewarm response to these vital – and hugely popular – reforms from parts of the corporate world is eerily familiar. In 1997, the incoming Labour government was told by the business lobby that the minimum wage would cost millions of jobs. But these apocalyptic warnings of a surge in unemployment proved to be entirely inaccurate. 

The minimum wage has secured fairer wages for the lowest paid – boosting living standards and consumer spending power – while employment has continued to rise. It’s rightly heralded today – by politicians from across the House of Commons – as a seismic policy. There is a clear lesson here: we should treat the scaremongering and baseless claims over the New Deal for Working People in the same way.

Make no mistake. This ambitious package of reforms is desperately needed. The evidence of the past 14 years is there for all to see. The UK’s long experiment with a low-rights economy has been a complete failure. A failure for working people, a failure for decent employers and a failure for the wider economy. 

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And things are getting worse – not better. The UK economy is in a dismal state, having fallen into recession at the end of last year. Insecure work has spiralled – with more than one million people on zero-hours contracts. And living standards have been hammered by more than a decade of Tory economic mismanagement. 

Security at work is a vital part of the answer to achieving stronger, high-productivity growth. I am not alone in saying this. The OECD concluded that countries with policies and institutions that promote job quality perform better than countries “where the focus of policy is predominantly on enhancing (or preserving) market flexibility”.

Even the government’s own Taylor Review – which it failed to act on – said “quality jobs increase participation rates, productivity and economic performance”. The flawed idea that weak workers’ rights somehow result in a stronger economy and higher productivity has been tested to destruction over the past 14 years. It is time for a new approach.

When I spoke to the CBI conference late last year, my message to employers was loud and clear: good employers have nothing to fear from the New Deal. In fact, they will recognise the promise of Labour’s economic reset and work with unions to boost productivity, skills and security at work.

This is a generational opportunity to build an economy with decent work at its heart. Employers should get behind it.

[See also: Keir Starmer’s thirst for power]

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