The Labour Party is pushing a wrongheaded narrative of evil bosses and easy solutions
These are strange times. The Liberal Democrats seem neither "liberal" nor "democrats". The Brexit Party risks becoming the party that blocked Brexit. And Labour has long ceased to be the party that best represents the interests of labour, if it ever was. Because their plans to shake up employment rules would likely harm the very people that they are supposed to help.
Under Jeremy Corbyn, Labour has developed a poisonous narrative where ‘bad bosses’ are always seeking to exploit ‘vulnerable workers’. The Labour leader has pledged to ban so-called ‘zero hours contracts’, which are simply contracts that do not guarantee a certain amount of work every week. It doesn’t seem to matter one jot that many employees, including students and working mums, actually quite like this flexibility and the additional jobs that it creates. In practice, people on these contracts typically work for an average of around 25 hours per week.
Indeed, if you believe Labour’s narrative, bosses are not just evil. They are also stupid. In particular, businesses are refusing to implement reforms that would boost the productivity of their own workforce, and hence increase their own profits, unless and until a Labour government forces them do so.
Illustrating this, Labour has proposed moving to a four-day working week within ten years, claiming that this would pay for itself in the form of increased output per hour. However, this measure of productivity would have to jump by an average of as much as 25% if people wanted to earn the same total wage despite working one day fewer.
That might be possible in some sectors, but in these cases any rational business already has every incentive to be flexible – and many already are. In contrast, achieving these gains would be a huge stretch across the economy as a whole and especially in public services, where taxpayers and those relying on these services would have to pick up the bill. Even Labour’s own advisor, the economist Robert Skidelsky, has rejected the idea of compulsion, citing the widespread harm caused by France’s introduction of a 35-hour week in 1998.
Labour has form in ignoring the views of independent experts, such as the Office for Budget Responsibility and the Low Pay Commission. Take the proposal to increase the national minimum wage to £10 an hour as soon as 2020 and extend it to the under-18s, thus more than doubling the cost of employing a young person almost overnight.
Actually, on reflection you don’t have to be an expert to guess what impact this is likely to have on jobs. The Conservatives’ plans for phased increases in the living wage, with a lower rate retained for under-21s, are at least more responsible, and consistent with the advice they have received.
Most recently, Labour’s cavalier approach is illustrated by its proposal for a huge transfer of power, as it sees it, from employers to employees. This includes giving workers full employment rights "from day 1", even before they have had any time to demonstrate their value to the employer. This is bound to make firms reluctant to take on new staff.
Labour is also proposing to end exemptions from the Working Time Directive, even where irregular hours may be an essential part of delivering vital services. And plans for sector-wide collective bargaining would hand power back to trade unions, who might protect their own members but have little interest in helping others.
Above all, Labour’s thinking on labour markets is completely muddled. On the one hand, the party seems to hate flexibility, as shown by its antipathy towards the gig economy. On the other, it thinks that employees should be able to demand flexibility whenever they like, such as the right to ‘set their own hours’.
At best, this will be a bureaucratic nightmare, with higher costs forcing businesses to raise prices or find offsetting savings elsewhere, including by cutting benefits and pensions. Indeed, Labour seems quite happy to saddle small businesses with additional costs, for example by requiring firms with as few as 50 employees to publish their gender pay gap figures and extending the scope to include ethnic pay gaps. (This would be completely pointless, as a sample this small would make the results even less meaningful.)
At worst, many businesses will simply decide that the additional costs are not worth the hassle, with the low paid and other more vulnerable workers most at risk of losing their jobs, or not being taken on in the first place. It is surely wrong that these people should pay the price for Labour’s economic illiteracy and obsession with a ‘class war’ that constantly pits employers against employees.