Business leaders would support tougher employment laws and a higher minimum wage to protect workers from exploitation and poverty during the second wave of Covid-19, according to a report.
The Centre for Progressive Policy (CPP) said urgent legal reforms were needed in the jobs market to prevent extreme levels of financial insecurity, in-work poverty and worker exploitation during the coronavirus emergency.
The thinktank said the end of the UK government’s furlough scheme later this week would dramatically increase the risk of widespread unemployment this winter, undermining the bargaining power of workers and leaving the door open to a rise in insecure work.
Calling for a shake-up of the law to halt a sharp increase in worker poverty, the thinktank said the government should ban zero-hours contracts and boost the minimum wage from its current level of £8.72 for over-25s. It also said a legal pay floor should be introduced for self-employed workers to protect them from exploitation.
The intervention comes as unemployment is expected to more than double by the end of the year to hit 1980s levels, from a rate of 4% before the pandemic struck to 12%.
Although free-market economists have argued that looser labour laws were among reasons Britain recorded a lower unemployment rate after the 2008 financial crisis compared with many other EU nations, the CPP said tighter restrictions were needed to safeguard workers’ rights. It said they could also be used by Boris Johnson to show the government was serious about his promise to “build back better” and “level-up” Britain’s lopsided economy.
The CPP, which is funded by Lord David Sainsbury, said as many as one in five workers in the health and social care sector work on zero-hours contracts, and that insecure contracts were most heavily used in the north-east.
In a sign of the appetite for change, it said business leaders had become more receptive to tougher labour market laws since the onset of the Covid emergency as companies require state support and as more households come under financial pressure.
According to a survey of 600 company bosses, 64% would back tightening existing labour market regulations, including an increase in the minimum wage. It said 40% of employers felt more responsibility to offer secure job contracts to staff in response to Covid-19, while a quarter would support further restrictions or a ban on the use of zero-hour contracts.
With the government under mounting pressure to fund free school meals and to tackle child poverty, the CPP said there was clear evidence that tougher labour market laws could also be used to protect families from falling below the breadline.
Research from the Joseph Rowntree Foundation shows in-work poverty has been increasingly driven by the impoverishment of working parents. According to figures from Eurostat, the UK also has one of the highest levels of workers at risk of poverty in Europe, with British workers more than twice as likely to fall into poverty as those in Ireland and Belgium.
Figures from the Office for National Statistics earlier this summer, revealed a rise in zero-hours contracts to the highest level on record. The number of people on zero-hours contracts increased by 156,000 in the three months to July, or by 17.4%, to 1.05 million.
Rosie Stock Jones, senior research analyst at the CPP, said: “Maintaining a system that legitimises the exploitation of society’s most important workers and contributes to rising levels of in-work poverty can no longer be acceptable. If the government truly wants to level up the country and empower more people to contribute to and benefit from increasing prosperity, they must deliver proper protections and improved conditions for our lowest paid workers.”