Why we need new Employment Bill to protect workers’ rights – Rebecca McDonald

THIS week we had the latest confirmation that Yorkshire’s jobs market is recovering.

What more can be done to safeguard jobs and employment rights?

The unemployment rate remained stable at five per cent between April to June – and a growing number of jobs brought employment close to pre-pandemic levels as restrictions lifted in July.

Relief at this good news means there is scope to resume previously paused plans; we should start with the Employment Bill. The Joseph Rowntree Foundation is calling for the Employment Bill to 
create new rights to more 
secure work, make flexible working the default, and deliver on the commitment to a well-resourced single enforcement body.

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For workers, this will mean knowing your hours in advance so you can plan budgets and family life, not having shifts cancelled at the last minute, genuine flexibility to fit your job around needs and circumstances (such as childcare), and a stronger guarantee of your rights and benefits.

What more can be done to safeguard jobs and employment rights?

The Bill’s introduction should not be delayed any longer. Here are three reasons why:

First, we should aim higher than a return to the pre-pandemic labour market. The recovery from the last recession was characterised by poor productivity and persistently high in-work poverty.

While many factors contributed, the common use of insecure work trapped many workers in poverty and played a role in limiting productivity growth. Pausing progress on good work risks repeating the same errors, at the expense of those already struggling to stay afloat.

As attention shifts from crisis management to securing a strong economic recovery, there’s a chance to embed greater security for workers into the economy we return to.

Rather than considering reforms once we’ve returned to an economy with the same flaws as before, pressing ahead with the Bill now signals to businesses the changes expected of them and gives them time to build these into their post-pandemic ways of working.

Second, by the time the Bill is implemented, we expect a stronger economy. If tabled this October and debated for 12 to 14 months, the Bill is unlikely to implemented before autumn 2022.

By then, the latest forecasts expect the economy to have returned to, and outgrown, its pre-pandemic size. Unemployment is likely to take longer but is expected to be very close to recovery by the end of 2022.

So, it is perfectly possible to press ahead without putting in place new reforms during a recession, or period of high unemployment.

Third, we do not expect our recommendations for the Bill to have a negative impact on the economy. For most businesses, the number of employees affected will be small so any adaptations will also be small.

There will be a minority of businesses whose costs will likely rise because they rely much more heavily on less secure forms of work, concentrated in the hospitality, entertainment and education sectors.

Rather than being able to cancel shifts on the day, they will need to give longer notice or pay compensation. Work patterns will need to be arranged further in advance. For most this will be a manageable change, so we do not expect it to cause significant negative economic consequences – such as lower employment – at the aggregate level.

Nor do we expect the Bill to materially impact the UK’s standing as a flexible labour market. The OECD’s employment protection legislation rating – one of the most-cited measures of flexibility – will be unaffected. Flexible contract types, such as zero-hours and casual contracts, will remain an option for businesses that need to respond to rapidly changing demand, but the degree of flexibility will be reduced.

Concerns about the economic risks of the minimum wage prevented its introduction for many years. In the end, they were proved wrong, and it has been possible for a carefully designed wage floor to benefit millions of workers without significant economic costs.

Similar fears now risk stalling the Employment Bill, depriving low-paid insecure workers of the right to more security and stability.

While it is right to be cautious about new regulations, our judgment is that benefits of starting now outweigh the risks.

It is essential the Bill is not put on hold and is brought in this Parliamentary session. Acting now signals the kind of recovery we all want: one built on good jobs.

Rebecca McDonald is a senior economist at the York-based Joseph Rowntree Foundation.

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