‘How Starmer’s team can get ahead of a minimum wage style backlash for the New Deal’

Labour’s New Deal for Working People could boost wages and make work more secure millions of workers within the first few years of the new parliament, without needing to wait for large-scale investment or growth.

With Starmer’s team seeking to deliver at pace on its promise of tangible change for working class voters, the answer is partly to be found in these measures, which pledge to end ‘one-sided flexibility’ and ensure all jobs provide a baseline of security and predictability. 

From rural cleaners paid as little as £7 an hour cash in hand, to security workers relying on mass WhatsApp groups for occasional last-minute shifts – the aim is to shrink UK’s swollen underbelly of poor work and to start to build a solid base of good work – an essential pre-condition for growth.

Facing down opposition

The New Deal package has been a prime target for some of the loudest voices on the right, with the Sun warning of a ‘French-style cauldron of riots and strikes’, and Chair of the CBI, Rupert Soames, arguing the proposed legislation will lead to ‘rising prices, business closures and higher unemployment’. 

Exactly the same arguments were made when the minimum wage was introduced under New Labour – now the single most successful economic policy in a generation according to the Resolution Foundation. 

But the so-called ‘plan to make work pay’ is very different to the minimum wage. For many of these proposals, success may be hard to measure in the short term, could be even harder to enforce, and may well require employers to implement real changes, not just to comply with legislation. 

Jonathan Reynolds and Angela Rayner’s teams, who will lead the process of introducing legislation by the autumn should prioritise several steps during the upcoming consultation period to successfully steer the reforms through.

Counter opposition with real world evidence from business

While lobbyists will make the charge that Labour’s policies will pile on costs for employers, studies show that reforms to the laws governing flexible work, working time, and employee representation, for example, will increase productivity and employment. Even the World Bank now argues that such laws can ‘increase job stability and improve productivity’.

But the best case is made by businesses themselves. Rayner’s team should highlight the leadership of everyday employers like Morrisons, Wickes and Sir Robert McAlpine, (all part of Timewise’ Industry Leaders’ Forums) who are already designing roles more flexibly or shifting away from zero-hour contracts and towards ‘guaranteed minimum hours’, because they know this is good for recruitment and retention and reduced staff sickness.

Just to take flexible working, this results in higher engagement which has been shown to reduce staff turnover by 87%. Inspirational examples like these will present the regulation as surfing a wave of changing employer practice, and not swimming against the tide.

Move ahead with ‘quick wins’ 

The Predictable Terms Act was expected to come into force in September and gives workers the right to request (not to have) a more predictable contract.

It has already received Royal Assent but needs accompanying regulations to bring it into force.

The new government should move ahead with this – while it doesn’t achieve everything the party wants to for insecure workers, moving forward with the Act and offering clear guidance will begin the process of requiring more employers to offer greater input, notice and control for workers – and begin the urgent task of creating more security at work. 

Be clear on what long-term success looks like   

Under pressure from business, a number of concessions were carved into the original 2021 New Deal for Workers paper, such as flexible working as default ‘except where not reasonably feasible’ or banning ‘exploitative’ zero-hour contracts only. Ambiguity makes sense while seeking election, but now needs to make way for explicit guidance for employers on how to operationalise proposed legislation.

On zero hours for example, in a bid to ban ‘exploitative’ zero-hour contracts only, it has been suggested that employees could be given the right to ‘opt in’ to these – on the basis that if they are choosing a such a contract, workers are not being exploited as they are exercising control.

But there is increasing evidence that when employees are given a choice, the vast majority prefer the certainty of secure work.

JD Wetherspoon breaks down its staff’s contracts on its website, which reveals 97% are on guaranteed hours and only 3% prefer the flexibility of zero-hour contracts. So while an opt-in may work in some instances, the real win would come from supporting more employers to follow the lead of businesses like WH Smith offering guaranteed minimum hours – (in this case of 4-40 hours per week), with coordination across a cluster of stores and responsibility for rostering devolved to area managers and staff. 

Understand wider barriers for employers and strengthen tri-partite institutions 

Not all of the obstacles to greater security, flexibility and predictability for workers are in the hands of employers. It’s almost impossible to vary standard shift patterns for your staff if they can’t get affordable transport or childcare outside of office hours, for example; if you’re a retailer who can’t recruit because of abuse of frontline workers or a bus company trying to unpick rigid workplace agreements to offer more flexible hours.

Consultations are also a chance to understand what government and unions can do better and to strengthen the tri-partite institutions representing government, workers and business that will be needed for negotiation and collaboration to resolve these and other issues, if the proposals are to have a real chance of success.

If the new government can get these steps right, not only will it make tangible the ‘ordinary hope’ the party is promising, but it will start the re-wiring of the economy needed for greater prosperity and fairness. We need to manage the erosion of middle-income jobs and the rise of ‘poor jobs’ far better in this country – this is just the start.

READ MORE: Sign up to our must-read daily briefing email on all things Labour

SHARE: If you have anything to share that we should be looking into or publishing about this story – or any other topic involving Labour or the election – contact us (strictly anonymously if you wish) at [email protected]. 

SUBSCRIBE: Sign up to LabourList’s morning email here for the best briefing on everything Labour, every weekday morning. 

DONATE: If you value our work, please donate to become one of our supporters here and help sustain and expand our coverage.

PARTNER: If you or your organisation might be interested in partnering with us on sponsored events or content, email [email protected].