Employment Rights Bill strengthens unions and undermines productivity
11 October 2024
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Housing and Planning
Economics
11 October 2024
Economic Theory
9 October 2024
Commenting on the Employment Rights Bill announced by the Government today, Professor Len Shackleton, Editorial and Research Fellow at the free market think tank, the Institute of Economic Affairs, said:
“It appears that the Employment Rights Bill is not going to be quite as game-changing as either the trade unions hoped or the business lobby feared.
“The creation of a nine-month probationary period – instead of a simple scrapping of the two-year wait for unfair dismissal law to kick in – may assuage some of the fears of businesses, but we will have to see how this shapes up in practice. The ability to dismiss during probation is likely to be tightly circumscribed.
“Enhanced eligibility for sick pay will result in some extra costs to both the taxpayer and employers, but the amounts involved are fairly small, while further adjustments to parental leave are unlikely to be generally of great significance but could hit some small businesses badly.
“The headline issue is flexible working rights. The right to request from Day One, and the tightening of grounds for refusal, could well land employers with significant extra costs – which for many businesses will come as a shock. Over time they will attempt to reduce these costs in various ways – by taking on fewer workers, by using temporary contracts rather than permanent workers, and by passing the costs on to employees in terms of lower pay than they would otherwise have received, or other detriments to the employment package.
“Employers will be relieved that there is as yet no planned compulsory Right to Disconnect, but this remains an issue on the horizon and is something to which Labour will probably return.
“What is particularly worrying is that the enhanced power of trade unions, linked with these new employment rights, will make it very difficult for ministers to pursue effective policies to improve the pitiful level of productivity in the public sector. This does not seem to figure in their thinking.”
ENDS
Contact: media@iea.org.uk / 07763 365520
Notes to Editors
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“It appears that the Employment Rights Bill is not going to be quite as game-changing as either the trade unions hoped or the business lobby feared.
“The creation of a nine-month probationary period – instead of a simple scrapping of the two-year wait for unfair dismissal law to kick in – may assuage some of the fears of businesses, but we will have to see how this shapes up in practice. The ability to dismiss during probation is likely to be tightly circumscribed.
“Enhanced eligibility for sick pay will result in some extra costs to both the taxpayer and employers, but the amounts involved are fairly small, while further adjustments to parental leave are unlikely to be generally of great significance but could hit some small businesses badly.
“The headline issue is flexible working rights. The right to request from Day One, and the tightening of grounds for refusal, could well land employers with significant extra costs – which for many businesses will come as a shock. Over time they will attempt to reduce these costs in various ways – by taking on fewer workers, by using temporary contracts rather than permanent workers, and by passing the costs on to employees in terms of lower pay than they would otherwise have received, or other detriments to the employment package.
“Employers will be relieved that there is as yet no planned compulsory Right to Disconnect, but this remains an issue on the horizon and is something to which Labour will probably return.
“What is particularly worrying is that the enhanced power of trade unions, linked with these new employment rights, will make it very difficult for ministers to pursue effective policies to improve the pitiful level of productivity in the public sector. This does not seem to figure in their thinking.”
ENDS
Contact: media@iea.org.uk / 07763 365520
Notes to Editors
- In Unions Resurgent? The Past, Present and Uncertain Future of Trade Unions in Britain, Professor Shackleton argued that “The consensus probably remains that unions have net negative effects on productivity in the UK” and that benefits enjoyed by unionized workers impose costs “on other workers who are displaced into poorer-paying jobs (or none), consumers who pay higher prices, shareholders who get poorer returns, and – particularly given unions’ strength in the public sector – taxpayers who pay more for public services.”
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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