As it prepares to take office towards the end of this year, Labor, and particularly its leader Sir Keir Starmer, are seeking to reassure corporate leaders that the planned overhaul of employment law will be significantly watered down.
Zero hours contracts may be allowed to continue with at least a few extra rights. Unions will not be invited back to help run the government and some extra employment rights will be given up.
No one should be deceived. The most important reform to date is the expansion of collective bargaining agreements. It may sound technical, but in practice these will mean that the Government sets wage rates in much of the private sector.
And if it happens, it will destroy what little remains of the UK’s once world-leading flexible labor market and destroy tens of thousands of small businesses.
There are a number of headline-grabbing proposals in Labour’s employment law reform plans.
Zero-hour contracts will be banned. Shooting and rehiring will be prohibited. Parental leave will be extended, flexible working will be encouraged, temporary work will be regulated for the first time, and even fashionable reforms such as the ‘right to close down’ and the ‘right to work from anywhere’ may be made. and perhaps even statutory paid leave without any loss of pay or employment rights.
These are the sort of reforms that have generated plenty of support on social media, and will please the party’s professional, public sector base, which is always happy to give itself a little more time off as long as everyone’s pay and pension rights remain equally generous.
Over the last few weeks the party has been heavily watering down many of the reforms, with promises of extra legal rights being replaced by vague commitments to best practice. The party’s leadership is desperate to keep big business on board as we head towards the election.
The final version of the package was “completely unrecognisable”, according to the Unite union, while its general secretary Sharon Graham described it as a “betrayal”. The final version of the plan will be produced over the next few weeks and we will see what is included in the final manifesto when the general election is called.
But the title rights won’t be the main thing. The essence of the plan will be in the details. The most important reform is also the most technical. In its 2021 policy draft, the party committed to “sectoral collective bargaining” for the entire economy.
As law firm Lewis Silkin noted in its analysis of the plans, this is “the most radical proposal in the 2021 Green Paper”.
What does it mean? In fact, under sectoral bargaining, there will be fair wage agreements drawn up at national level between the Government, trade unions and employers’ associations for each different sector of the economy.
A nationally accepted wage would be set for dental assistants, maintenance workers, engineers, retail workers, bar staff and dozens of other daily duties. If you run a restaurant in Staffordshire you will be told how much to pay the chef, and at a veterinary clinic in Somerset you will be told how much to pay the receptionist.
This will be a radical change for England. In this country, only 26 percent of workers overall are covered by collective wage agreements and only 13 percent of workers in the private sector (the bulk of these in the construction and transportation sectors, which have a longer history).
It is more common in some continental European countries; 99 percent of jobs are in Italy, 98 percent in France and 51 percent in Germany; But it’s not a good idea to try and copy labor systems that create permanently higher levels of unemployment. among young people.
In reality, trying to micromanage the pay and conditions of the 32 million people with jobs in the UK is sheer madness.
There are three big problems. First, it seeks to establish a set of national standards for businesses that vary depending on local conditions, who their customers are, and what part of the market they serve.
Should the chef at a Michelin-starred restaurant in Marlow be paid more or less than his equivalent at a roadside café in Derbyshire? Or should a dental technician in prosperous Cheshire be paid the same as in much poorer Wrexham, even though housing and other costs are vastly different?
No way. All we would do is set rates that are completely wrong for everyone.
Then he will increase the fees. Just as the National Living Wage is rising much faster than inflation, we can be sure that the “fair wage” for every sector will continue to rise, especially if Angela Rayner chairs the meetings.
True, some employers will be able to afford this, but others will not and will quickly become unemployed. It’s hard to see how this helps anyone. In fact, increases in the living wage have already meant the closure of some companies, and the impact of “fair wages” will be even greater.
Finally, it will destroy flexibility. The UK economy has such a long list of flaws that it’s difficult to keep track of them all, but one of its strengths is that it has a workforce that can adapt very quickly to changing conditions. We will throw this away by setting rigid national wage rates, and anyone who thinks this is an improvement is kidding themselves.
Of course, collective bargaining may have worked in the industrial, controlled economies of the 1950s and 1960s. They may even still be working in countries that are much more dependent on industry, such as Germany. They won’t be working in the UK’s service-based entrepreneurial economy in the 2020s.
In reality Labor is living in the past and trying to go back there will destroy the economy.