Less than two months in, one aspect of Keir Starmer’s government is becoming clear. This administration is closer to the trade unions than any we have had in the past 45 years.
It is not just that the government has ceded readily to wage demands from teachers (a 5.5 per cent rise this year), junior doctors (22 per cent over two years) and train drivers (15 per cent over three years) – it has done so without seeking any agreement to changes in working practices. Given the abysmal productivity record of the public sector in recent years, especially since the pandemic, this is a remarkable omission.
The government’s failure to represent tax-payers’ interests in these pay awards serves as an invitation for further unreasonable demands. Less than 48 hours after being awarded its pay rise, Aslef announced further strikes over rostering on LNER trains. Pointedly, this is a franchise which has already been nationalised – so we cannot expect industrial relations to improve once the government fulfils its policy of bringing other franchises under state control.
Meanwhile, the ability of unions to call damaging strikes has just been increased by the repeal of Conservative legislation to require minimum service levels on strike days. We are a long way from Tony Blair, who accepted many of Margaret Thatcher’s union reforms. In 1997, New Labour stuck to its pledge to maintain fiscal discipline, at least for the first three years. There were plenty of anti-discrimination laws, which added bureaucratic burdens, but initially there was no ratcheting up of the public sector wage bill band, and certainly no encouragement for trade unions to call industrial action.
Starmer’s employment reforms are only just getting going. A bill announced in the King’s Speech will include a ban on what the party calls ‘exploitative’ zero-hours contracts, though what counts as exploitation is not yet clear. Employees will be empowered to demand flexible working hours from their very first day of employment.
So far we have only seen the pay awards; we have yet to see the tax rises needed to fund them
This week the government added another provision: employees will gain a ‘right to switch off’. Employers will be discouraged from contacting their employees outside working hours, with punitive awards for compensation threatened.
Individually, these proposals might sound reasonable – there are without doubt bosses who find it too easy to trouble their employees on days off. Yet together, the government’s proposals add up to an environment which promises to be hostile to employers. There are perfectly legitimate reasons why employers might need to contact their staff out of hours. An emergency might require extra hands. Employers should not have to risk paying compensation simply for asking for extra staff at times of high demand.
This basket of employment laws is not compatible with Starmer’s promise on becoming Prime Minister to prioritise ‘growth, growth, growth’. If it becomes too hard for employers to hire the right people, fewer people will be hired. Banning zero-hours contracts may result in enhanced job security for some, but it will rob businesses of the ability to expand and contract their workforces according to the economic conditions. For employers and employees alike, it will result in a loss of flexibility. Many of those who work on zero-hours contracts are happy to do so because it means they can choose not to work when they do not wish to. For, say, students who want to fit work around their studies, that is an important freedom.
During the Brexit campaign, some hoped London would become ‘Singapore–on-Thames’ as Britain forged a business–friendly path free from pettifogging EU rules. Yet under Labour we appear to be heading towards becoming Paris-on-Thames. The price to be paid for French-style employment laws is we risk ending up with French levels of unemployment. There trade unions rule the roost, with seats on company boards, and workers’ councils which have to be consulted whenever a company proposes a major change.
If Starmer thinks that putting more power into unions’ hands will prove popular, he may be disappointed. Some voters will always feel a kneejerk sympathy with striking workers, no matter how unrealistic their demands, yet polls before the election showed shrinking support for the strikes. Union membership is a fraction of what it was during the unions’ heyday, declining from a peak of 13.2 million members in 1979 to less than half that in 2023. This is largely down to the decline of large industrial employers. Unions are now far more likely to represent white-collar workers. This has broken the link between the old working class and the labour movement.
So far we have only seen the pay awards; we have yet to see the tax rises which Rachel Reeves will need to fund them. When it comes to public employees, one man’s pay rise is another man’s tax rise. A Labour government came to a sticky end indulging trade unions in the 1970s. This one may well end up going the same way.
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