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21 May 2024

Will Labour’s New Deal for Workers fix a broken jobs market?

Internal rows over major reforms to employment law have captured headlines. But what impact will they have if implemented?

By Harry Clarke-Ezzidio

Last week, Labour faced crunch negotiations with its disgruntled affiliated trade unions over one of the party’s flagship proposals for government: its ambition to reform workers’ rights. 

Original plans for Labour’s New Deal for Working People included commitments to ban zero-hour contracts, bring in protections against unfair dismissal and entitlements to sick and parental leave from day one of employment, as well as  to introduce a single status of worker to combat the phenomenon of bogus self-employment in the gig economy. Sectoral collective bargaining would be introduced across the economy; fair pay agreements would be negotiated nationally with newly empowered trade unions. An initial pilot of the scheme was touted for the social care sector, in which low-pay and poor conditions are rife. The eye-catching set of policies – perhaps the most radical one remaining after the party dropped its commitment to the £28 billion per-year spending on the green transition – was initially announced by the deputy leader, Angela Rayner, in 2021.

But in the run-up to last week’s negotiations, a leaked Labour dossier sent to trade unions outlining the party’s updated plans saw some of the original commitments were set to be watered down. Rather than a promise to introduce sectoral collective bargaining and a national fair pay agreement in social care, that particular element of the New Deal would be subject to consultation involving extensive input from employers. “It’s not only about consultations,” a union source told the Guardian of the leaked document, “which is how the Labour party have tried to frame this; there are promises that were made… which have gone completely.” The pledge to legislate for the changes within the first 100 days of a future Labour government was also reportedly at risk.

“If Labour do not explicitly recommit to what they have already pledged, namely that the New Deal for Workers will be delivered in full within the first 100 days of office, then a red line will be crossed,” commented Sharon Graham, the general secretary of the Unite, after the dossier leaked. She labelled it a “betrayal” to workers and said the policy “is turning what was a real New Deal for Workers into a charter for bad bosses”.

Ahead of negotiations between the opposition and its affiliated unions last Tuesday (May 14), Graham even suggested that Unite may divert election funding earmarked for Labour away from the party. In the end, however, the talks proved productive, and Labour and the unions are in agreement – at least publicly.

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A joint statement by all parties reaffirmed the opposition’s “full commitment” to the version of the New Deal that was agreed at Labour’s National Policy Forum last summer, although that version of the reforms already faced criticisms of being “watered down” from the party’s original ambitions at the time. Last summer’s agreement axed plans to raise sick pay and extend it to the self-employed, and it wasn’t as strong in its language around committing to moves towards the single status of worker. Unite was the only affiliated union to not formally back the changes last year.

Labour and the unions will meet again in three weeks to confirm the changes. “We’ve got the position we all want,” Dave Ward, general secretary of the Communication Workers Union, told LBC. “This will be the biggest difference in rights the country has ever seen in decades.”

While the internal wrangling on the New Deal has played for all to see, little consideration has been given to what the policy impacts will be. Will the reforms have any meaningful impact on Britain’s sick, stagnating workforce?

The biggest impact is likely to be felt by those on the lowest wages, who are often in insecure work and more likely to be on zero-hours contracts. “We know there’s a close correlation between people on insecure forms of work and poor mental and physical health,” Tim Sharp, senior policy officer at the TUC union, told Spotlight. Since 2010, he added, there has been a proliferation of precarious jobs – “most notoriously, the gig economy”. The innate instability of the gig economy is “harmful”, according to Tony Wilson, director of the Institute for Employment Studies think tank. “If you’re in low paid, insecure work – without control, with poor relationships, without good support, no voice in your workplace – you can pretty much guarantee things are going to be a bit shit,” he told Spotlight. “And it’s going to make your well-being and your health worse.”

In the document leaked ahead of this week’s negotiations, Labour had weakened its stance on banning zero-hour contracts outright and said it would instead allow employees to “opt on” to them. But unions warned of the “extreme power imbalances between employers and employees”, suggesting many would be “forced” to accept precarious contracts. With the reversion to the previous agreement, employers would have to offer workers a minimum number of “guaranteed hours”.

There is a recurring sense of ambiguity with the New Deal. Sharp describes it as a “potentially transformative set of proposals”, highlighting the potential that bolstering trade union rights brings. But, Wilson notes, while it is “positive” that Labour is “addressing the first [question] of ‘how do we make work more supportive of health and wellbeing?’ it doesn’t really do much on the other bit around ‘how do we help people who have significant health conditions and are struggling in work?’”

A record 2.8 million people are now economically inactive – meaning they are not actively looking for work – due to long-term sickness, while the Conservatives have recently announced measures to tighten the administration of sick notes and increased requirements for people to continue receiving their disability benefits.

“Half of all people with a disability are in work, while [over] 80 per cent of people who do not have a disability are; that is the fundamental, structural inequality in the labour market that we haven’t addressed, and that we often choose not to address,” said Wilson. “What we need to avoid is thinking that the solution to that is to patch people up when they’re sick, so they can take any job.”

A potential “blind spot” of whatever version of Labour’s New Deal, suggests Wilson, is that it doesn’t introduce a framework between the state, employers and individuals affected by physical and mental health issues to stay in work for longer by giving afflicted groups additional support. “The supply side measures we need include active approaches to labour market policies that help people to stay, or get back into work,” Wilson concluded.  “The New Deal for Working People, in effect could be… characterised as passive measures; it’s measures that change the regulatory environment. They don’t require any kind of active government intervention,” he added. “We need the active [interventions] alongside the passive ones.” 

[See also: What will Labour’s campaign look like?]

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