Business responds to Taylor Review of employment practices

Business groups have given their reactions to the recommendations of the Taylor Review into modern-day working practices, which sets out the key principles for providing ‘fair and decent work for all’.

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The review suggests that a national strategy is needed to help provide security in such areas as wages, quality of employment, education and training, working conditions, work life balance and the ability to progress at work.

One of the main areas of focus relates to the so-called ‘gig’ economy, with the report recommending the creation of a new category of worker, known as a ‘dependent contractor’, to provide additional rights and benefits for those who are currently classed as self-employed, but who work for firms which have a ‘controlling and supervisory’ relationship with their workers.

The additional benefits would include sick pay, holiday entitlement and the minimum wage, and the new employment status would also oblige such firms to pay millions of pounds in national insurance contributions.

The report also suggests that there should be no further increases to the non-wage costs of employing an individual, and called for an end to the cash-in-hand economy, with a move towards such fees being paid for via trackable platforms such as PayPal.

Business groups have given mixed reactions to the report’s findings, with many welcoming the focus on labour market flexibility, but also warning that some areas, including the plans to rewrite employment status tests, are a cause for concern.

However, the TUC warned that the review ‘is not the game-changer needed to end insecurity and exploitation at work’.

Extend minimum wage to cover self-employed, says think tank

Minimum wage legislation should be extended to cover self-employed workers who do not control their own rate of pay, according to a think tank.

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The Resolution Foundation claims that of the 4.8 million people defined as self-employed, around half earn below the low pay earnings threshold of £310 a week.

The group argues that the government needs to do more to protect certain groups of self-employed workers, such as those operating in the so-called ‘gig economy’, as they do not have the opportunity to set their own wages.

If enacted, the change could also bring greater protection to those operating in more traditional sectors such as hairdressers and minicab drivers.

It proposes that companies who set the rate of pay for independent contractors would be required to calculate whether a person working at an ‘average’ pace would be able to earn at least the minimum wage after expenses.

The body has submitted its recommendations to Matthew Taylor, who is leading a government review into modern UK work practices.

Conor D’Arcy, a policy analyst at the Resolution Foundation, said: ‘By extending minimum wage protections to those self-employed people whose prices are set by a firm … self-employed people in the gig economy would be given protection against extreme low pay for the first time ever.’

However, Seamus Nevin, head of employment and skills policy at the Institute of Directors, warned that an ‘obligatory minimum wage would undermine the business model of many gig platforms … who would find it hard to justify paying people at times when there was no demand’.

UK inflation rate rises to highest level in nearly four years

The UK’s inflation rate as measured by the Consumer Prices Index (CPI) rose to 2.9% in May, up from 2.7% in April, data published by the Office for National Statistics (ONS) has revealed.

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The rising costs of package holidays and imported computer games helped to push the rate to its current level. The ONS found that food and clothing prices also rose, but fuel prices fell.

Economists had previously predicted that the rate of inflation would remain at 2.7% in May.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), commented: ‘Higher inflation is a key business concern as it squeezes margins and weakens their ability to invest, particularly during this time of heightened political uncertainty.

‘A key focus of the new government must therefore be on easing the current pressure on firms’ cost base by tackling the burden of upfront costs and taxes associated with doing business in the UK.’

Meanwhile, the Trades Union Congress (TUC) expressed concerns that the UK’s rising inflation rate ‘continues to far outstrip wage growth’.

Frances O’Grady, General Secretary of the TUC, warned: ‘The election showed that working people are struggling. The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK.’

UK workers set to experience fall in real wages, analysis suggests

UK workers are set to experience a fall in real wages in 2017 and 2018, according to an analysis published by the Trades Union Congress (TUC).

The analysis, which is based on forecasts from the Organisation for Economic Co-operation and Development (OECD), found that the UK will be one of just five OECD countries to experience a fall in real wages.

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UK real wages are on course to fall by -0.5% by the end of 2018. The business group found that, in other OECD countries, real wage growth is set to increase by an average of +2.6%.

Real wages for UK workers will be -6.8% lower in 2018 than they were in 2007 before the financial crash, the OECD has predicted.

The TUC is urging the next government to act in order to boost UK real wage growth.

Frances O’Grady, General Secretary of the TUC, commented: ‘British workers have endured the longest pay squeeze since Victorian times.

‘Britain badly needs a pay rise – and all the political parties must explain in their manifestos how they will boost living standards across the UK.’

UK workers’ wages ‘fell by 1% per year’ following financial crisis, TUC suggests

Wages for workers in the UK fell drastically following the 2008 financial crisis, research from the Trades Union Congress (TUC) has suggested.

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The TUC’s analysis of International Labour Organisation (ILO) figures outlined that, from 2008 to 2015, UK real wages fell by 1% a year.

As a result, the UK ranks 103rd out of 112 countries for wage growth during the post-recession period. The business group warned that this ranking is unlikely to improve any time soon.

Wages for German workers, however, rose by 0.9% per year during the period, while wages for workers in France rose by 0.6%, the analysis revealed.

The data also showed that average wage growth across all countries was 2.3%. The median was 1.6%.

Frances O’Grady, General Secretary of the TUC, commented: ‘UK workers suffered one of the worst pay squeezes in the world after the financial crash. And with food prices and household bills shooting up again, another living standards crisis is a real danger.’

Pay growth to remain slow until end of decade, suggests CIPD

Wage growth is predicted to remain slow until the end of the decade, a new survey by the Chartered Institute of Personnel and Development (CIPD) has suggested.

The data, which is based on survey responses from over 1,000 businesses, indicates that pay will rise by just 1.7% during the next year, contributing to the ‘jobs-rich, pay-poor’ UK economic environment.

This predicted low figure may possibly be due to weak productivity and the introduction of additional expenses for employers, such as the National Living Wage (NLW) and pensions auto-enrolment.

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Mark Beatson, chief economist at the CIPD, stated: ‘The NLW and roll-out of pensions auto-enrolment were introduced to improve the living standards of low-paid employees, but this can only happen without significant job losses if the productivity of low-paid employees also increases’.

The wage growth predictions come as the Confederation of British Industry (CBI) cut its economic growth forecast for both this year and for 2017.

Carolyn Fairbairn, CBI director general, said: ‘A dark cloud of uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which is chilling some firms’ plans to invest.

‘At present, the economic signals are mixed – we are in an unusually uncertain period.’

Jobs recovery could be impeded by red tape and extra taxes, warns CBI

UK businesses looking to hire face additional taxes and red tape on jobs, making employing new staff too expensive, the Confederation of British Industry (CBI) has stated.

New labour costs, such as the National Living Wage (NLW) and the apprenticeship levy, mean that many companies are considering raising prices or placing a freeze on recruitment in order to offset the extra costs that these schemes will bring.

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Carolyn Fairbairn, CBI director-general, stated that firms may have to cut down their workforces in order to save.

Speaking to The Sunday Times, Mrs Fairbairn warned that unless there are changes, it is ‘inevitable that there will be significant job losses’ in some sectors.

She added: ‘There’s a danger of Government complacency, with companies facing multiple increasing costs, through the apprenticeship levy, the National Living Wage and unreformed business rates, these are acting as a cumulative drag that could hamper growth’.

According to a recent study by the CBI, 43% of businesses expect to hire new permanent employees next year. Furthermore, a total of 51% of employers will consider raising wage levels to offset any costs introduced by the new compulsory NLW or the apprenticeship levy.

Some 47% of firms believe that the new apprenticeship levy will be ‘costly and bureaucratic’. A mere 16% of UK businesses support the levy.

However, a Government spokesperson said the measure ‘will mean that businesses and the public sector invest in the skills and training they need.’

The levy will be introduced in April 2017 at a rate of 0.5% on company wage bills, raising an estimated £3 billion a year.

Meanwhile, the NLW will come into force in April 2016, and will apply only to those workers aged 25 or over. The rate will initially be set at £7.20 an hour, rising to £9 an hour by 2020.