Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
The UK government’s impact assessment of its labor rights reforms is “not fit for purpose” because it does not examine the impact of rising costs for employers on wages, employment and economic activity, a watchdog group has warned.
Analysis published last month in conjunction with the government’s Employment Rights Bill found that the legislation, which is at the heart of Labour’s pledge to improve living standards, could cost businesses up to £5bn a year, with the impact hitting low-paid sectors. I concluded that I should concentrate.
The government claims that workers will benefit to the same extent, the overall economic impact will be minimal, and individuals will have greater security and control over their working lives.
However, the Regulatory Policy Committee, an independent watchdog that scrutinizes the evidence on which policy decisions are based, said the government had justified eight measures contained in the wide-ranging bill, including some of the most controversial changes. He said he had not shown sufficient evidence to do so.
This means that the government’s assessment of the bill’s overall impact is inadequate, according to the watchdog’s assessment.
The RPC gave a ‘red’ rating to cost accounting, including the introduction of same-day protection against unfair dismissal, the repeal of anti-strike laws and the introduction of new rights to guaranteed working hours for workers on precarious contracts. (meaning the analysis is not fit for purpose). and curbing the practice of “firing and rehiring.”
These measures have raised concerns among business groups, saying the bill’s triple whammy, the budget’s payroll tax hike and minimum wage increase, will hurt employment, suppress wages, suppress business investment and stave off inflation. It claims to promote
“Given the number and scope of the measures, we will conduct labor market and broader macroeconomic analysis to understand the overall impact on employment, wages and production, and in particular the shifting of costs for employers to employees. That would be appropriate,” RPC said.
Tina McKenzie, policy chair of the Federation of Small Businesses, said the findings should be a “sharp wake-up call” for ministers who need to “think again about the dangers of a cavalier approach to work and jobs”.
He added: “This country cannot afford to impose additional costs and risks on small employers based on such overwhelmingly weak evidence.”
The RPC accused the government of failing to demonstrate the scale of the problem it was trying to address and of failing to compare its proposals with alternatives beyond “doing nothing”.
The assessment released last week notes that the costs of some individual measures, such as layoffs and restrictions on rehiring, are not included in the bill’s impact estimates because they are potentially high and uncertain. He also pointed out that he had not done so.
“Businesses across the country already knew this,” Shadow Business Secretary Andrew Griffiths said of the RPC’s findings. He equated the bill with increasing employer national insurance contributions and called it “a second wave of attacks on job creators.”
Recommended
A government spokesperson said an “initial indicative” assessment of the main bill gave “the best estimate of its likely impact at this stage” but that “we will refine our analysis and conduct further assessments as the bill progresses.” I intend to do so.”
Many details of the implementation of the reforms have not yet been finalized and will be set out in regulations at a later stage.
A consultation on proposals to make it easier for trade unions to gain collective bargaining rights ends next week. Determine the statutory sick pay rate for low-income earners. And a new ban on “exploitative” zero-hours contracts will also apply to agency workers.
The British Chambers of Commerce will use Tuesday’s Employment Rights Bill Committee hearing to highlight businesses’ “serious concerns” about the bill and the speed of consultation.
BCC general secretary Shebaun Haviland said businesses welcomed the bill’s aim of providing employees with a “discrimination-free workplace”, but warned that the bill was being “forced through at breakneck speed”. did.
“Many businesses have already been hurt by this budget proposal, and if it passes, it could hinder growth,” he added. “Businesses are particularly concerned about the lack of detailed consultation on trade union change, especially since the government’s own assessment was very vague about its impact.”
