M&S Chair warns Labour Worker Rights Overhaul could lead to “lack of growth and productivity”

Archie Norman, chairman of Marks & Spencer, has voiced concerns over the potential consequences of a Labour election victory on worker rights, cautioning that it could deter investment in the UK

Norman has highlighted, according to a Telegraph report, the critical issue of stagnant productivity and investment as the country gears up for a general election later this year, with Labour projected to secure a substantial win based on polling trends.

Expressing his apprehensions, Norman emphasised the necessity for any incoming government to carefully deliberate on policies that could impact flexibility and recruitment costs, potentially deterring new investment. He underscored the existing high standards of employment terms and practices in the UK, stating that while exceptions exist, the majority of businesses are committed to fostering motivated and engaged workforces in the knowledge-based economy.

Labour, on the other hand, has pledged to bolster workers’ rights as part of its agenda to create a more equitable society. This includes promises to abolish qualifying periods for full employment rights, address issues in the gig economy, and grant employees the right to claim unfair dismissal from day one of employment.

However, concerns linger among business leaders regarding the clarity and implications of Labour’s proposed reforms. Efforts to engage with influential figures such as former Bank of England governor Mark Carney and Barclays CEO C S Venkatakrishnan indicate Labour’s endeavour to allay fears and garner support from the business community.

Acknowledging the need for improved communication, a Labour insider conceded according to the Telegraph that clarity on employment reforms is essential and emphasised ongoing engagement with investors. Despite reassurances from Labour, apprehensions persist among business lobby groups, with calls for cautious consideration of proposed changes.

Notably, criticism has emerged from figures like Rupert Soames, president of the Confederation of British Industry (CBI), cautioning against adopting an overly stringent employment model akin to that of Europe.

Ben Jones, CBI Lead Economist, said in a statement that while growth was probably fairly modest over the first quarter, the outlook is improving with our business surveys showing growth expectations for the second quarter at their strongest for almost two years.

“But we need to get some momentum going in the economy without undoing hard work to bring down inflation,” said Jones.

He continued, “In this General Election year, it’s crucial parties of all stripes focus on structural challenges facing economy – like poor productivity and labour market pressure.

“What firms across all regions, nations and sectors tell us they need to drive sustainable growth, is stability and a long-term economic vision – which in turn will deliver prosperity to businesses and households alike.”

Similarly, concerns have been raised by industry leaders like Alex Baldock of Currys, who warns of unintended consequences of the Labour Party Worker Rights proposals, that could potentially hinder business flexibility and investment.

Modernising workplace rights: but to what end?

In response, Labour maintains that its reforms are aimed at modernising workplace rights without jeopardising essential business practices. Jonathan Reynolds, the shadow business secretary, criticized Norman’s remarks, attributing the UK’s economic challenges to the current Conservative government’s policies.

Norman’s warning underscores broader concerns about the UK’s investment climate, with official figures revealing subdued business investment growth compared to international counterparts. Factors such as Brexit uncertainty, the pandemic, and energy crises have contributed to hesitancy among investors, exacerbating long-standing productivity issues in the UK.

As the debate intensifies, the forthcoming general election will likely pivot on the balance between worker rights and economic prosperity, with businesses closely monitoring developments to inform their investment decisions.

M&S increases in employee pay and family leave policies

Pay increase: M&S is raising their minimum hourly wage to £12.00, which is a 10.1% increase from last year and a 26.3% increase since March 2022. This applies to all UK customer assistants.

Family leave improvements: M&S is investing an additional £5 million annually to improve their maternity, paternity and adoption leave policies. Starting April 1st, paternity leave will be extended to 6 weeks at full pay and maternity and adoption leave will be doubled to 26 weeks at full pay.

M&S says these changes are designed to make them a more attractive employer and to recognize the important role their employees play in the company’s success.