The 6.8 million people most likely to benefit from the new Employment Rights Bill
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On Thursday 10 October, the UK Government will table a new Employment Rights Bill in Parliament.
Since the start of the millennium, labour market regulation has been overtaken by the pace of change of the economy, technological advances and global crises that have impacted the lives of working people. Despite the Taylor Review of Modern Working Practices identifying the challenges facing workers, businesses and society in 2017, successive Governments have missed the opportunity to modernise employment legislation and improve the working lives of people across the country.
The proposed Employment Rights Bill is a once in a generation opportunity to address this situation and tackle the persistent nature of insecure and low-paid work that has blighted the opportunities of many workers and left structural inequalities unchallenged.
Who are the workers most likely to benefit from the new Bill?
As the Government Ministers approach the despatch box on Thursday, they must seek to improve the working lives of the 6.8 million people in severely insecure work.
Figure 1: One in five workers are in severely insecure work (6.8 million people, UK)
Source: UK Insecure Work Index 2024 - Work Foundation calculations using ONS Labour Force Survey microdata, 2023 April-June quarter.
Recent Work Foundation research has established that one in five workers are trapped in severely insecure work, which is characterised by unpredictable hours and pay, low wages and a lack of access to rights and protections. On average in 2023, employees in severely insecure work earned £63 less per week than those who were in secure work and amounts to a pay penalty of £3,276 per year.
Severely insecure work particularly affects workers who already face other forms of labour market disadvantage:
- Women are 2.3 times more likely to experience severely insecure work than men
- In 2023, a record 1.45 million disabled workers are in severely insecure work. This has been driven by the increase in the number of disabled people of working age and the growing numbers of disabled people in employment
- Workers from Pakistani, Black / African / Caribbean / Black British and Mixed / multiple ethnic groups are much more likely to be in severely insecure work than white British workers
- Young workers aged 18-24 are twice as likely than older workers aged 50-65 to be in severely insecure work.
Figure 2: Workers from Pakistani, Black and mixed backgrounds are much more likely to be in severely insecure work
Source: UK Insecure Work Index 2024 - Work Foundation calculations using ONS Labour Force Survey microdata, 2023 April-June quarter.
Insecure work is overrepresented in sectors such as social care, hospitality and retail. For too many workers, they opt into insecure roles due to lack of other options – many are forced to trade off security for flexibility. For some, this has profound, and long-term consequences for their financial and personal lives. Unpredictable hours make it challenging to manage family responsibilities or to plan childcare, and irregular and low pay can make it very difficult to budget and plan ahead.
The key challenges that the new Bill must tackle to be successful
As the UK Insecure Work Index highlights, labour market insecurity is driven by a number of interrelated factors – such as low pay, a lack of access to employment rights and protections and unpredictable hours. The measures proposed in the Employment Rights Bill are focussed on addressing these issues, but how they are implemented will be critical.
For example, the Government’s proposal to ban exploitative zero-hour contracts stands to benefit over a million people who rely on them as their main form of employment, and have to deal with the precarity over their working hours and income that they cause. This is particularly true for young people who aren’t students, who are 3.6 times more likely to be on a zero-hour contract than other age groups.
Our survey of over 3,000 workers in insecure jobs highlighted that 57% wanted more predictable hours. But the reality is there isn’t a single definition of a zero-hour contract in law that can be easily banned.
Therefore, to kerb the use of these arrangements, Government should require employers to provide guaranteed contractual hours for all roles from day one – while allowing for workers themselves to seek secure, flexible working arrangements from day one too. And in addition, establishing a new right to reasonable notice of work schedules could make a significant difference, empowering workers to better manage personal and family responsibilities, including childcare.
Or take the promised reforms to strengthen Statutory Sick Pay (SSP) – currently 1.15 million people (3.5% of the UK workforce) do not qualify for statutory sick pay as they do not meet the earnings threshold of £123 per week. This issue disproportionately impacts groups already facing structural inequalities in the labour market. However, even when a worker is eligible, the SSP only replaces just 17% of average weekly earnings which is one of the lowest levels amongst the richest nations in the OECD.
Figure 3: Workers unable to access statutory sickness pay (2023)
Source: Work Foundation calculations of Labour Force Survey microdata, January-March 2024. Disabled workers are defined under the Equality Act 2010.
So it is critical that alongside extending access to statutory sick pay by removing the earnings threshold and reducing waiting times before workers can claim it, Government also increases the rate of sick pay too. Many workers are already struggling to survive on £116.75 a week, so it is vital to ensure it provides enough to support individuals to get well before returning to work and doesn’t inadvertently push people on to longer term sickness benefits.
Finally, what about the promises to strengthen parental leave and pay which could be crucial in supporting more parents to remain in the labour market?Maternity pay in the UK still provides a relatively low level of earnings replacement, offering less than 50% for individuals earning £500 per week, affecting low-income mothers in particular. To address this, the Government should consider substantial reforms to increase the pay during maternity, paternity, and shared parental leave to support gender equality and family wellbeing more effectively.
Collectively, these reforms could represent a crucial step towards modernising the UK’s labour laws to reflect the current social and economic realities, promoting a more secure and fair workplace for all. In doing so, it could also support Government efforts to tackle wider labour market challenges, such as the rise in economic inactivity due to long term sickness which stands at 2.8 million people. Making work pay, and jobs more secure, will potentially make it easier for those with health conditions to remain in employment, and help de-risk the journey back to work for those who have fallen out of the labour market.
But as ever, the devil will be in the detail of the Bill. Once the Employment Rights Bill is published, a period of consultation will begin to determine the specific regulations and measures that will be introduced. While it’s crucial that Government engages with workers, unions and businesses as it does so, it must remain true to the ambition of tackling persistent insecurity in the UK as well as the structural inequalities it perpetuates. By doing so, the Government can establish the foundations for the sustainable growth of the UK economy over the years and decades to come.
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