September and October are usually busy months in business, a time when many projects and recruitment campaigns kick off following the summer holiday period. However, this year is different. We are currently experiencing a market that is extremely quiet and business confidence seems very apprehensive. Why is this? Why is the business market – particularly that of small and medium sized enterprises (SMEs) that I and my colleagues work with – so quiet, so apprehensive?
What we are being told is the uncertainty of the Government’s plans are largely behind this pause. Not only apprehension of what the Autumn budget at the end of October may bring to the business world, but apprehension of the much awaited plans for changes to employment legislation. The uncertainty of what these will be and when they will be announced, combined with the rumours of squabbling behind the scenes both with the trade unions and between Government ministers, provides no reassurance and does little to help business confidence, particularly amongst SMEs, who provide the engine room to our economy.
Businesses are nervously awaiting announcements from the Government on its proposals for new employment legislation, part of its “New Deal for Working People”. It initially stated these would be published within the first 100 days of the new Government. This window expires around October 13th and we have not yet heard any concrete date for the announcement, though mention was made during the recent Labour party annual conference that the proposals would be announced during October.
The proposals are expected to include very significant changes to the landscape of employment, including banning zero hours contracts, ensuring ‘day one’ employment rights (which currently only apply after two years’ service), the scrapping of existing restrictions on industrial action and giving trade unions a bigger role across all employers.
The changes are expected to have far reaching impacts on all employers across the U.K., and will be particularly challenging for those small and medium sized enterprises who we work with. There are 5.5 million SMEs in total across the U.K., employing two thirds of all workers. SMEs typically do not have their own HR or legal teams to interpret and implement new legislation or the resources to administer any additional bureaucracy. Businesses are telling us they have real concerns that the changes could have serious consequences for them, while the continuing uncertainty around the new requirements is delaying decision making, investment and recruitment. They are holding back on projects and recruitment as they fear the new legislation may make these unviable, financially or risk wise.
The changes could therefore have a significant overall negative impact on the economy and growth, stifling entrepreneurism and future employment prospects.
There appears to be a degree of chaos in Government around the development of the proposals, with the Secretary of State for Business and Trade, Jonathan Reynolds, disagreeing with the Deputy Prime Minister, Angela Rayner, over how probation periods would work should day-one employment rights be introduced. There is a huge lack of business experience across the Cabinet, including the Business Secretary himself. In 2001, Reynolds graduated in politics and history from the University of Manchester. After leaving university he worked for the local council for a short period, then trained to be a solicitor, prior to working as a political assistant for the MP James Purnell. He was elected as a Member of Parliament in 2010, a role which he has continued in to date.
The concern of business leaders is that Government ministers and particularly Rayner, with their combined inexperience of business and their strong ideological leanings, will give in to the demands of the trade unions when finalising their proposals for Parliament. Despite only 20% of the registered electorate voting Labour, the party currently has 403 seats in Parliament (after the suspension of seven Labour MPs and the resignation of Rosie Duffield) and a simple majority of 157 seats. Therefore, its proposals are likely to sail through the House of Commons with ease and only the Lords will bring closer scrutiny.
The power dynamics between the unions and business, combined with the ongoing uncertainty, are increasing concerns across the business community. Ministers seem to be struggling to remember that they are no longer playing student politics. They must realise that playing along to the trade union fiddle, increasing bureaucracy and red tape required of employers, the majority of whom are SMEs without large teams ready to apply and manage these requirements, could have a hugely damaging impact. The economy continues in a perilous state, with both public and private debt continuing to increase. Now is not the time to add further burden to the economy and business, stifling the chances of growth and recovery.
Steve Chilcott is an HR professional of 30 years and founding member of Fair Job U.K., an HR consultancy aiming to depoliticise the U.K. workplace.
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