Can Starmer balance workers’ rights and business interests?

Politics is a balance of push and pull, give and take, and getting the timing right on both. Of playing the angles to thread together the support that you need. For Labour members in Britain (where the key issues are thankfully economic again after a Brexit-based interregnum) the central question has always been how far you can ‘push’ policy ‘to the left’ while remaining electorally successful. Conversely, how far can you attract business before the unions, traditionally the largest financial backers and still the historic link to the ‘workers’, start making governing more difficult – and the average employee feels no benefit from a Labour government. Central to this is workers’ rights.

Much of Keir Starmer’s early framing of this government (before and after power) was around ‘putting the Party back in the service of workers’. This was multifaceted and offered something for much of the electoral coalition: first, the party could only serve workers if it was in power (take note Mr Corbyn et al). Second, the commitment demonstrably relates to improving living standards. Third, there was a possible payoff in policy terms for the unions in supporting fully the ‘changed Labour’ that Starmer represents. Labour’s New Deal for Working People was drawn up with unions. Now the legislative compromise must be thrashed out with businesses too.

The Employment Rights Bill that passed its second reading on Monday night provides for:

• Protection against unfair dismissal, and paternity leave and unpaid parental leave from ‘day one’ of employment
• Universal entitlement to sick pay from the first day of illness, rather than the fourth day
• A new statutory probation period – for consultation and not introduced before 2026
• Right to a guaranteed-hours contract if a worker works regular hours over a defined period (to be set)
• ‘Fire and rehire’ banned in most circumstances
• ‘Flexible working’ to be the default
   

Business groups have pounced on the government’s impact assessment that says the cost to businesses will be £5 billion. The Federation of Small Businesses (FSB) warned: ‘With all the good intentions, this will inject fear into that employment relationship. It makes most small businesses very nervous’, and called it a ‘rushed job, clumsy, chaotic and poorly planned…it lacks any real pro-growth element and will increase economic inactivity, seriously jeopardising the Government's own 80 per cent employment target.’

For Paul Nowak, the general secretary of the TUC, the business costs from the Bill are ‘negligible’ and more than offset by wider gains: ‘Decent employers will welcome these measures and the improvements they will bring for their businesses and workforces,’ he said.

Without an element they can welcome as ‘pro-growth’, the Conservatives and business organisations may argue the Employment Rights Bill will harm businesses and make them less likely to hire – essentially that unemployment will go up. Labour and the unions will say that they heard the same negative argument in 1998 other the minimum wage, and none of it came true. Signed copies of the NMW Bill are still top auction prizes at Labour Party fundraisers.

Our suspicion is Labour will welcome argument (even public) about this policy, for exactly the reasons contained in the first paragraph above. And isn’t policy discussion what politics is all about? Focusing on measures that will change how we live will be a great help to Labour after a bumpy September and early October. Should it ever need to give succour to union opinion during the 2+ years of negotiation on this bill’s secondary legislation, it need only work out where to ‘push’ it further.