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Labour’s Employment Rights Bill will lead to job cuts and price hikes, a poll of 31 major retailers has found, in the latest sign the government’s legislative agenda risks harming economic growth.
The legislation, which is nearing its final stages in Parliament, introduces sweeping changes to zero-hours contracts, sick pay, leave, flexible working and dismissal, and is set to pile extra costs on employers.
The retail sector is already facing significant pressures from high taxes, including an April rise to employers’ national insurance contributions (NICs), which is stifling employment and undermining investment.
But the British Retail Consortium (BRC) has now found that major retailers are increasingly concerned about the hits they will suffer from deputy prime minister Angela Rayner’s workers’ rights reforms.
Seven in ten HR directors at big retailers believe that the workers’ rights reforms will have a negative impact on their businesses, according to BRC’s survey, highlighting the widespread pessimism about the damage the bill could do in its current form.
More than half of respondents also said that the Employment Rights Bill would lead to a reduction in staff numbers while 61 per cent said it would “reduce flexibility” in job offerings.
The 31 retailers surveyed employ some 500,000 people altogether, the BRC said.
Among some of the changes to employment rights proposed include the addition of rights to guaranteed hours. The BRC said the changes would limit the numbers of part-time job offerings, which make up half of the 3m workforce in retail.
The hit to the jobs market would follow a difficult recovery since the pandemic as retail has seen 250,000 job cuts, with more expected in the wake of higher employers’ national insurance contributions (NICs) and a hike to the national living wage.
The BRC’s chief executive, Helen Dickinson, warned that the changes to employment rights risked “putting retail job numbers further into reverse”.
“Those in charge of retail hiring are clear: unless amended, the bill will make it even harder to keep and create jobs and reduce the flexibility that defines many existing retail roles,” she said.
“This matters. Local, flexible retail jobs are an important stepping stone for those entering or returning to the workforce.”
“Retailers agree with the government on the need to crack down on unscrupulous employers, but in its current form the Employment Rights Bill could backfire, putting the brakes on hiring, or worse still, putting retail job numbers further into reverse.”
Changes to Employment Rights Bill would ‘provide clarity’
The controversial bill will be debated in the House of Lords on Tuesday and it could be amended.
Business groups have led calls for Peers to amend key elements of the bill as they sent a coordinated letter claiming the Employment Rights Bill would damage growth prospects.
The BRC was not a signatory to the letter signed by leaders at the British Chambers of Commerce (BCC) Confederation of British Industry (CBI), Institute of Directors (IOD), Federation of of Small Businesses (FSB) and Make UK.
Dickinson said specific changes to guaranteed hours proposals would go a long way in easing pressures on retailers.
“Changes to guaranteed hours proposals and ensuring government’s willingness to engage translates into meaningful changes to the current direction of travel will provide clarity so retailers can stop considering or making decisions based on worst case scenarios,” Dickinson said.
“Many of the amendments being debated in the Lords today would provide some of this valuable clarity, so I hope to see them supported by peers and accepted in turn by the government.”
The BRC also warned consumers also face paying more for items at high street shops as most HR directors said the costs of the bill would have a knock-on effect on the price of goods.
The BRC previously predicted that food inflation could hit five per cent by the end of this year. as it warned that the increases in NICs and the national living wage would cost £5bn altogether.
