If there’s one person who ought to understand the fallibility of the hiring process, it’s surely Sir Keir Starmer.
Earlier this week, he had to admit defeat as his Chief of Staff Sue Gray slumped out of Downing Street, bringing to an end her tumultuous 94 days in the role.
But, oddly enough, I sympathise with the Prime Minister.
For Sue Gray’s demise speaks to the fundamental truth that, in business, it’s easy to get hiring decisions wrong.
In fact, throughout my career in business – including running the UK’s then largest pub chain, Punch Taverns, with 30,000 employees – only around half of our new hires were ever a genuine success. And I know many other business leaders who privately admit the same: recruitment is difficult and no one gets it right all the time.
If there’s one person who ought to understand the fallibility of the hiring process, it’s surely Sir Keir Starmer. Earlier this week, he had to admit defeat as his Chief of Staff Sue Gray slumped out of Downing Street
But, oddly enough, I sympathise with the Prime Minister. In business, it’s easy to get hiring decisions wrong. Hugh Osmond (pictured) is a founder of Punch Taverns and a director of the Various Eateries restaurant group
The Government’s new Employment Rights Bill will give more rights to new hires (stock image)
Businesses, therefore, need the flexibility to remedy mistakes made during the hiring process. And up to now, it’s been relatively easy to do so.
New employees are not afforded the full suite of benefits and rights until they’ve proven themselves in a role. But with the introduction of the Government’s new Employment Rights Bill, that is all about to change.
If a new hire has full rights from day one, they become a potential financial liability to any employer which might want to let them go.
This poses an existential threat to small and medium-sized businesses in particular, which are the backbone of the UK economy but are not necessarily equipped with the legal and personnel staff to cope with the new legislation.
This will either drive those firms into the ground, or – at the very least – prevent them from expanding at anywhere near the rate necessary for competitive growth.
But it’s not just employers for whom this Bill will be stifling. Those people who are unemployed and looking for a job may face more shut doors than before – particularly young people with little experience, trying to get their feet on the first rung of the employment ladder.
Why would even the most ambitious business take the risk of hiring an unproven employee if any mistake becomes ruinously expensive?
Many will instead funnel their resources into technology and seek to automate tasks for which they would previously have sought a new employee. Or send the work to offshore countries – such as India with a largely educated and IT-savvy workforce – where it can be done much more cheaply.
The big winners from Labour’s employment overhaul will be tech firms and overseas employers, not jobseekers.
This is particularly problematic because the UK is currently experiencing a crisis of worklessness. There are not only 1.44million working-age people classified as unemployed, but an astonishing further 9.3million who are ‘economically inactive’ (in other words, unemployed but not seeking work). Also proposed is a total ban on so-called ‘zero hours’ contracts. But this, too, will only make job centre queues longer. The hospitality industry, especially, relies on these more flexible arrangements due to the nature of shift work, and the seasonal variations in how busy they are.
It is that flexibility that appeals to employees, as well. Indeed, a new study from the London School of Economics shows that jobs on zero hours contracts attract 25 per cent more applicants than equivalent full-time roles. If employees want them, why would Labour want to get rid of them?
Elsewhere, the Bill resembles more of a ‘couch potato’s charter’ in granting employees the right to work from home. Most major private sector employers which have tried this have concluded that not only does less work get done but it damages morale and teamwork. Yet, here is the Labour Party trumpeting it as a solution to the economy’s dismal stagnation.
And it is from the private sector (with productivity growth of 4 per cent since pre-Covid) that the public sector could take a leaf given that its productivity is 6.8 per cent lower over the same period.
But perhaps the most egregious part of this Bill is its lack of clarity. Starmer claims workers would be protected from day one but also says he’s consulting on potentially permitting a statutory nine-month probation period. So will businesses be penalised for letting go of failing new staff or not? More uncertainty, then.
Labour MPs and trade unions hailed the reforms, with Ms Rayner saying the Government was ‘calling time on the Tories’ scorched earth approach to industrial relations’ Pictured: Deputy Prime Minister and Levelling Up, Housing and Communities Secretary Angela Rayner
Jonathan Reynolds, the Business secretary, today said that allowing staff to work from home brought benefits to firms – though he added that there will be guidance issued setting out when bosses can insist staff come into the office.
The big winner here is evidently not business but the unions. Yesterday, further details emerged showing the Bill will make industrial action easier, by running a red pen through anti-strike legislation introduced by the Tories.
No wonder businesses are already running scared of this Bill that will be a source of deep uncertainty until its mooted implementation in 2026.
If Labour gets its way, unemployment will rise and productivity will fall. These are anti-growth policies in the extreme.
Hugh Osmond is a founder of Punch Taverns and a director of the Various Eateries restaurant group.
