According to a recent survey conducted by the Confederation of British Industry (CBI) and recruiters Pertemps, the UK’s business attractiveness is at risk of declining due to proposed workers’ rights reforms. The survey found that 62% of respondents believe that the UK will become less attractive for investment and business over the next five years if Labour’s proposed reforms are implemented in their current form. This sentiment is echoed by nearly four in ten firms who see regulations on flexible working as a threat to labour market competitiveness, with the figure rising to 58% over the next five years.
One of the key concerns raised by businesses is the ability to absorb the extra costs associated with the expected employment law changes. Only a quarter of firms surveyed expressed confidence in their ability to manage these costs without it impacting growth, investment, jobs, or benefits. In fact, 54% of respondents disagreed or strongly disagreed that they could afford the higher costs expected from the workers’ rights package without facing unintended consequences.
Matthew Percival, the CBI’s skills director, highlighted the damaging uncertainty created by the lack of detail surrounding the proposed reforms. While acknowledging the objectives behind the reforms, Percival emphasized the need for collaborative work between ministers, businesses, and SMEs to ensure that the legislation is implemented in a way that minimizes unintended consequences. He stressed that the additional pressure from employment costs could inhibit businesses’ ability to invest, hire, and grow, especially for smaller companies.
The CBI/Pertemps Employment Trends Survey also revealed concerns among companies regarding the challenges of kickstarting economic growth. There is a lack of clarity on Labour’s ‘plan to make work pay’, as well as the potential risks of unintended consequences. However, businesses are calling on ministers to swiftly implement the growth and skills levy and make adjustments to the apprenticeship levy to facilitate investment in workers’ skills and training.
Among the 152 firms surveyed, which included 110 SMEs and 56 larger companies, nearly half anticipate the size of their organizations to be larger in 12 months compared to the present. This optimistic outlook on growth is seen as encouraging by Carmen Watson of Pertemps, who emphasized the importance of proactive investment in skills training to support this expansion.
In response to the survey findings, a spokesperson from the Department for Business and Trade (DBT) stated that the concerns raised by under 100 businesses do not reflect the broader sentiment among the hundreds of companies actively consulted during the development of the proposed reforms. The majority of employers are said to support the government’s plans to strengthen employment rights, with recent surveys indicating that they believe it would have a positive impact on productivity, staff retention, and profits.
Overall, the survey results highlight the delicate balance between enhancing workers’ rights and maintaining a business-friendly environment in the UK. The key takeaway is the importance of transparent communication, collaboration, and proactive measures to address concerns and ensure the successful implementation of any proposed reforms.
Impact on Business Attractiveness
The potential decline in the UK’s business attractiveness is a significant concern for companies across various sectors. The survey findings indicate a clear apprehension among businesses regarding the impact of Labour’s workers’ rights reforms on their operations and investment decisions. The uncertainty surrounding the proposed changes has created a sense of unease among firms, with many expressing doubts about their ability to navigate the additional costs and regulatory requirements.
Challenges and Opportunities
Amidst the concerns highlighted in the survey, there are also opportunities for growth and development. The positive outlook on organizational expansion among a significant portion of surveyed firms indicates a willingness to adapt and invest in future opportunities. By addressing the challenges posed by the proposed reforms and leveraging the potential benefits of a skilled workforce, businesses can position themselves for sustainable growth and success in the evolving business landscape.
Collaborative Approach
The call for a collaborative approach between government, businesses, and SMEs underscores the importance of inclusive decision-making and stakeholder engagement. By fostering open dialogue, sharing insights, and working towards common goals, stakeholders can collectively address challenges, mitigate risks, and capitalize on opportunities presented by the changing regulatory landscape. This collaborative effort is essential for building a resilient and competitive business environment that supports both workers’ rights and economic growth.