Downtown in Business has urged the government to think again on its sweeping employment law reforms, warning that this week’s double whammy of announcements – UK unemployment hitting a four-year high, and growth at a disappointing 0.1% in the last quarter, is a flashing red light the Treasury cannot afford to ignore.
The rise in joblessness is not some act of God or an unfortunate coincidence. It follows directly on the heels of the Chancellor’s decision in her first budget to increase employers’ National Insurance contributions. That move—despite repeated warnings from business organisations—has nudged thousands of small and medium-sized firms to freeze hiring, delay expansion, or quietly trim headcount. Add a slowing economy, weak confidence, and tightening margins into the mix, and you’ve got a labour market that is starting to creak.
Now ministers are preparing to layer on a package of employment law changes that will push business confidence from “strained” to “strangled”. Proposals around day-one rights, extended probation protections, vague new sexual harassment duties requiring “all reasonable steps”, and a six-month window to lodge unfair dismissal claims all pile additional risk, red tape, and cost onto employers who are already struggling to keep the lights on.
“Let’s be blunt: these changes are landing at exactly the wrong moment,” said Frank McKenna, the group chair and chief executive of Downtown in Business. “Businesses are dealing with higher NI bills, higher wage costs, higher borrowing costs, and lower consumer demand. Throwing a blizzard of new employment regulations at them now is the political equivalent of tying lead boots to a swimmer who’s already treading water.”
McKenna added that the unemployment and growth figures should prompt a fundamental rethink inside government.
“How can we talk credibly about growth when firms are becoming more cautious about hiring? How can we expect SMEs to lead the recovery if we keep loading risk onto their shoulders? And how can we drive job creation when we’re making it more expensive and more complicated to employ people in the first place?”
Downtown in Business is calling on the Treasury and the Business Department to pause, consult properly with employers, and reshape the planned reforms so they support—not stifle—job creation. The organisation has warned repeatedly
that heavy-handed regulation will disproportionately hit the very businesses Labour says it wants to champion entrepreneurs, fast-growth firms, and local employers in towns and cities across the UK.
“The government has an opportunity here to show it listens,” McKenna said. “Rethink the programme. Strip out the measures that will damage the labour market. Work with business, not against it. If Labour gets this right, it can rebuild confidence and get hiring moving again. If it gets it wrong, unemployment will continue to rise, growth will continue to be anaemic—and the country will pay the price.”
CLICK HERE TO VIEW DIBs EMPLOYMENT LAW BRIEFING TO MPs.
