How the Labor Party can sabotage its big game in business

Anne Franke, chief executive of the Chartered Management Institute and a self-proclaimed “classic swing voter,” was another in the room. She said Labour's policies seemed «promising».

“I saw recognition of the problems and issues that businesses face.”

But as the election approaches, keeping businesses and workers happy will be a challenge.

The party has promised a radical “new deal for workers” that will strengthen rights from day one of employment. Labor also promised to scrap zero-hours contracts and create a «real» living wage.

“Make no mistake, this is a program that we will deliver hand in hand with the trade union movement,” Shadow Leveling Secretary Angela Rayner told members last Sunday.

“Labour's New Deal for Working People is our plan to raise wages, make work safer and support working prosperity.”

Strengthening worker protections and attracting business is a difficult balance. Labour's policies threaten to increase costs for companies at a time when inflation and a slowing economy are already causing problems for many businesses.

Rayner, herself a former union official, promised party members to change workers' rights within Labour's first 100 days in power.

The plans also include ending the practice of firing and rehiring, strengthening the power of unions and strengthening protections against sick pay.

The announcements have caused a stir among companies, which are concerned that rushing through sweeping new legislation could go against the interests of both workers and companies.

“I think the key is not to act too quickly,” Kate says. A shoemaker from the Recruitment and Employment Confederation.

She fears that introducing such sweeping changes immediately would not leave time for consultation with businesses and their feedback to be reflected in legislation.

Changes are already in place. problems that business leaders have identified. For example, ending zero-hours contracts could prove unpopular with both employees and companies, says Shuzmit.

Data from the Office for National Statistics shows that around 1.2 million workers in the UK are on zero-hours contracts. Most of them — 60% — are not interested in working more hours or entering into a different type of contract.

“There are a number of people who work on zero-hours contracts because that’s what works for them,” says Shoosmit. “They want flexibility for both work and family life reasons. So there should be no need to ban zero-hours contracts at all.”

Plans to empower workers from day one are also a cause for concern. These changes will actually shorten probationary periods, making it much more difficult for you to get rid of employees who perform poorly to begin with.

Shoesmith says: «We shouldn't take away the ability for employers to support every member of their team, including tackling poor performance or thinking about how to make sure the right person is in the right job.»

Matthew Percival of The Confederation of British Industry says the changes, «while well intentioned», will make it «impossible for firms to undergo a probationary period».

He says: “Poorly targeted legislation risks damaging a key strength of the UK economy without having the desired impact on living standards.”

Labour is also likely to face a struggle to create a “real” living wage that takes into account cost of living, not just wage growth across the entire economy and economic conditions.

Such a change would likely lead to an increase in the wage bill at a time when businesses are already facing severe wage pressure.

Jane Gratton, from the British Chambers of Commerce, says: «The national cost of living has risen faster than inflation in recent years, resulting in pressure for pay rises for people earning above the minimum wage as well.»

Despite this warnings of a significant rise in unemployment following the introduction of the minimum wage in 1997, this never happened. This suggests that companies can often afford more costs than they admit.

However, Gratton notes that businesses are facing the toughest conditions «in generations» and now have much more debt due to Covid.

«There is a limit to how much new costs firms can absorb, and growth exceeding inflation is unsustainable in the long term,» she said.

Unemployment has risen gradually since last summer to 4.3% as interest rates soared to a 15-year high.

Economist John van Reenen of the London School of Economics admits Labour's policies could lead to higher costs for employers, but says the changes could also boost productivity, meaning that companies will earn more per worker.

Shadow Chancellor Rachel Reeves says improving worker safety and boosting economic growth are “two sides of the same coin.”

“There is now a wealth of evidence that greater job security and higher pay lead to a more motivated and more productive workforce,” she told The Telegraph.

“Building on the fact that the last Labor government has done with introducing a national minimum wage for the first time, we will go further and turn it into a real living wage.»

However, there are signs of tension over these plans in the labor market even within the party.

Peter Mandelson, who helped Labor to a landslide victory over Tony Blair in 1997, used several speeches at the Labor Party conference in Liverpool last week to warn his colleagues against going too far.

«As we reform labor market policies and legislation, we must take care that we do not reintroduce rigidity or union prerogatives,» he said at an event, saying the party must be wary of expanding rights and the possibilities of “those wonderful grassroots strike funds that Len McCluskey and Sharon love so much.” Graham and one or two others.»

Full reforms also risk scaring off international investors, he said.

Unite general secretary Graham, meanwhile, accused Mandelson of being the man who would have resisted the creation of the National Health Service in 1945 and said that Labor under Starmer was “too timid.”

Reeves insists: “The Labor Party is a proudly pro-worker party. This is how we were created, it's in our DNA. But we are also proudly pro-business, because you can't be pro-worker if you don't support businesses that create jobs, wealth and prosperity.»

How sustainable this position is will depend on how stable this position will be. will be put to the test as elections approach.