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Labour’s workers’ rights reforms risk harming those they seek to protect

The well-intentioned reforms could discourage employers from taking chances on inexperienced candidates, says Szu Ping Chan

UK deputy prime minister Angela Rayner Deputy prime minister Angela Rayner (Image: Leon Neal/Getty Images)

I still remember the day I landed my first job. Knocked back after being told I wasn’t good enough to wash hair or work at the local shoe shop, I was nervous as I waited for my turn for what I can only describe as a five-minute speed date with my potential next boss.

I’d already passed the first test — a group task where we were all invited to build something together using Lego. A bit of a bizarre exercise for a high street retailer I thought, and what happened next was a bit of a haze. But a few weeks after my 16th birthday, I walked out of that building with a contract in my hand and a spring in my step.

I was hired as a Christmas temp, but they kept me on the books well after the January sales and I was soon made permanent. To this day I feel that the few years I spent at the Oxford Street retailer taught me more about financial independence and how to manage time than I have learnt since. The discount wasn’t bad either.

It’s for this reason I fear Angela Rayner’s plans to overhaul workers’ rights will close off some of the avenues that were open to me when I was young. At 16, with zero experience, someone took a chance on me. I had never written a CV, let alone set foot on a shop floor.

The deputy prime minister wants to give today’s workers — including those looking for their first job — more power. Part of it is unfinished business. Matthew Taylor’s excellent review of modern working practices was full of ideas of how to strengthen rights while maintaining flexibility in a world where 9-5 is no longer ubiquitous.

Rayner wants to end “exploitative” zero-hours contracts and give all workers the right to paid holiday and sick pay, things that many white-collar workers, such as me, take for granted. But the more contentious elements include unfair dismissal rights for all workers on day one as well as empowering workers to switch off outside normal hours.

There is also talk of letting workers sue their bosses for making them work too hard. And Labour will also make flexible working a day-one right.

As James Lowman, chief executive of the Association of Convenience Stores, told me recently, common sense tells you that picking the “lower risk” option — or the person with more experience — is a no-brainer.

This is because the consequence of making a mistake could run into thousands of pounds, making bosses more reluctant to hire young workers who might take longer to get up to speed in a job. Worse still, they could decide not to hire at all. Not a good look when the government is targeting 80 per cent employment.

Proposals to strengthen workers’ rights come at the same time as another policy that I have written about in these column inches: the minimum wage. The Low Pay Commission, an independent body that advises the government about the National Living Wage and the National Minimum Wage, recently recommended that more than a million low-paid workers receive a 6 per cent increase in the minimum wage next year to £12.10. This could be even higher after the commission was instructed by Labour to take into account the rising cost of living.

Labour also plans to remove what it says are “discriminatory age bands” that mean a lower wage is paid to younger people. While this would start at 18 and not 16, it means roughly 250,000 young people risk missing out on jobs if the overhaul backfires.

There are 77,000 people aged between 18 and 20 who are paid a lower minimum wage rate of £8.60 per hour. A further 200,000 people aged between 18 and 20 are paid somewhere between this rate and £11.44.

Levelling up pay without levelling up experience, or allowing for training, leaves employers facing stark choices. Who would you hire if the costs were the same? The teenager, or the more experienced worker?

Another executive told me that it wouldn’t just be the young who are penalised.

“Green doesn’t necessarily always mean young,” they said. “It could be someone switching careers. It could be someone who finds that their good job no longer exists because they’ve been made redundant by technology, and they’re needing to switch to a new sector.”

It’s not just entry-level jobs that are at risk either. Progression could also be hindered by rules, red tape and extra costs, meaning some roles such as the team leader may start to disappear. Every nest needs worker bees as well as a queen. Having lots of drones may not be essential. But too few means the hive can’t function properly.

Take Heather, whom I met during the course of my first job. Heather was efficient, made sure the shop floor was adequately replenished and ensured the stock room kept the in-demand goods flowing. She had more responsibility than me but didn’t want the hassle of being in charge of the rota or finding cover when someone called in sick.

Not everybody wants to be a manager. But most people want to see a path to progression. I fear that forcing employers to pay more at the bottom will just lead to fewer opportunities to climb to the top.

Take David Potts, the former chief executive of Morrisons. He left school at 16 and began his working life behind the deli counter at Tesco earning £10.50 a week.
After a four-decade career at Tesco, he was parachuted into the top job at the rival supermarket.

“It’s really, really important to have that progression,” Lowman at the ACS told me. “Anything that frustrates young people’s ambitions is bad for their development and for the contribution that they can make to the business and wider economy.”

The government would be wise to tread carefully.

Szu Ping Chan is economics editor of The Telegraph  

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