Why Labour was always going to have to compromise on workers’ rights

News that Labour is redrafting some of its pledges to transform workers’ rights is a sign the party is preparing to take the duty of governing seriously, Jessica Frank-Keyes writes

Politics, as Bismarck once put it, is the art of the possible, the attainable. The art of the next best.

Not to cast aspersions on the living who surround Keir Starmer, but it seems as if the original Iron Chancellor (look away now, Rachel Reeves) has been whispering in his ear as of late. Labour’s manifesto may still be under lock and key but in the absence of a full policy slate, key promises have – rightly – been put under the microscope.

Following the £28bn green spending commitment, which fast became an albatross around the leadership’s neck, before finally being dropped, the party’s pledges to transform workers’ rights – under the ‘New Deal for Working People’ banner – have taken centre stage.

Originally announced back at Labour’s party conference in autumn 2021, the admittedly ambitious set of employment law reforms – spearheaded by Angela Rayner – included full employment rights from day one, as well as ending zero hour contracts and fire and rehire. But the party predictably faced a raft of interventions from senior business voices, including the new president of the business lobby group the Confederation of British Industry (CBI) Rupert Soames.

At Labour’s national policy forum last summer – the democratic wing of its policy-making process, led by elected members – certain pledges on gig economy workers and probation were scaled back, meaning firms could still dismiss new recruits while in a trial period. Despite the changes – and subsequent outcry from Unite and Momentum – business reaction clearly remained challenging enough for Starmer to continue tweaking the measures.

In February, Soames told the Financial Times that the body was giving “private feedback” to Labour on firms’ concerns, and warned against the UK adopting a “European model” of over-regulation for fear of “unintended consequences” damaging productivity.

Conservative attacks on what they dubbed Labour’s threat to jobs also stepped up as Chancellor Jeremy Hunt rolled the pitch for his spring Budget – and the Trades Union Congress (TUC) unveiled polling which they said indicated Labour’s proposals were “extremely popular” among voters.

In the latest twist in the saga, Labour recently sent a fresh version of its policy proposals to trade unions, which sparked accusations of “betrayal” and watering down from Unite leader Sharon Graham, ahead of a crunch meeting with the opposition leader and union officials yesterday. 

But crucially, is this all a marker of Labour’s renewed seriousness in wooing City bosses in a bid to claim the ‘party of business’ crown from the Conservatives? Or bowing to pressure from vested “corporate interests” after a misguided ‘smoked salmon and scrambled egg offensive’, as the party’s left flank would have it?

Like most things in politics, to an extent, it all depends on who you ask. Professor Chris Rowley, an employment and human resources expert, makes the case for Labour sticking to its guns, citing the impact of “comprehensive” employee rights on “low staff turnover rates and better productivity”.

“Starmer would do well to listen to union leaders making the case for retaining the party’s commitments around employment rights,” the Bayes Business school academic argued. “The short-termism which puts cutting labour costs above developing a trained and supported workforce is a key factor in the country’s poor productivity record.”

But Ben Smith, a senior associate at employment lawyers GQ Littler, warned the changes could amount to a “significant shift” in the legal landscape, and a “shock to many” bosses. Implementing a “more formal” dismissal process, he said, would create a “steep learning curve” for employers, while new legal protections for staff could see a spike in tribunals.

Anyone who brings a case to an employment tribunal can expect to wait almost a year for it to be heard, after the backlog soared to around half a million post-pandemic. And Smith reckons Labour’s plans could trigger “a significant increase in unfair dismissal claims”, risking “even longer backlogs” due to the fact there is “little or no further capacity”.

Both arguments have their merits, and are grounded in the recognition that creating the conditions for economic growth is the crucial litmus test for the next government. Labour insists there have only been limited changes to the ‘New Deal for Working People’ since last summer, and vowed it would “hit the ground running” on employment reforms.

Interestingly, pollsters at Savanta found Conservative voters actually backed most of the measures originally floated by Rayner, even giving 73 per cent support to the proposed ‘right to switch off’ which would, in theory, prevent employers contacting workers out of hours.

But political research director Chris Hopkins picked up on a “dose of realism among the public”, despite what he said was “near universal support” for the package.

“Our research implies the public thinks there is a balance to be struck between flexibility for workers and employers, and stopping bad practice,” he noted.

But reports have now emerged that civil service guru/hired gun Sue Gray, Starmer’s chief of staff, has her fingerprints on the watering down of the commitment to pass new legislation within the first 100 days in power. However, Andrew Harrop, general secretary of the Fabian’s Society, suggested this is broadly part of “preparing for implementation” in government; more or less Gray’s entire raison d’etre. 

“Regardless of pressure from different lobbies and interest groups, it’s just about making sure that plans are workable,” he said. “Labour is months away from government, and thinking, ‘we’re gonna have to put this all into effect’. So some of it really is ‘how will this work in practice’, rather than a watering down.”

And he stressed that changes were more minimal than some have portrayed, adding: “Some of the language has been moderated a bit, just to reflect the reality that a new government will inevitably need to consult on major policies. The idea that you’d implement a major change in legislation of employment rights without consulting business, that would never happen.”

Truthfully, to most people, reforming health policy without speaking to doctors and patients, or schools without consulting teachers and parents, might strike us as odd, or downright damaging.

The worker’ rights package represents a key point of difference for the party from their Conservative opponents; a riposte to the apathetic accusations of ‘you’re all the same’, and a vital retail offer for activists to sell on the doorsteps. But ultimately, Labour were always going to have to compromise on this one – and it’s right that they are meeting with both unions and bosses, all of whom offer valuable perspectives.

Much has been written on the polarisation of politics, but if you want effective, lasting policy change – grown-up governance that actually achieves its aims – concession should not become a dirty word.