Bosses Are Planning Mass Layoffs

As the country heads into recession, new research shows that 1 in 5 employers plan to sack workers – the only way to fight the wave of layoffs is to organise.

1938: Men queue the State Employment Service office in San Francisco, California, waiting to register. (Dorothea Lange / New York Public Library / Unsplash)

The failure of ministers to plug glaring holes in employment rights following the P&O Ferries sacking scandal leaves workers vulnerable in the face of a looming economic downturn. This lack of protections has exposed the nation’s workforce to avoidable job losses and underemployment in the coming year. 

The shocking no-notice dismissal of nearly 800 maritime workers may have disappeared from the headlines, just as the ferry giant’s bosses and government ministers no doubt hoped. But workers are more vulnerable than ever given the dark economic outlook coupled with the failure of successive governments to address a labour market rigged against them.

The Bank of England last week predicted that unemployment could hit 5.5 per cent thanks to a beleaguered economy that is expected to start shrinking by the end of this year. And according to a recent survey, one in five employers has said they are expecting to make lay-offs over the next year.  Meanwhile, recent surging prices are weighing on the living standards of workers, many of whom have seen little pay growth in the last decade.

Ministers have ignored calls for an emergency budget to boost the ailing economy or to honour their commitments to boost the position of working people through employment law reforms. And it is those working people who could bear the brunt of the consequences of their inaction.

A shameful feature of the UK economy over the last 15 years has been the shifting of risk from employers to workers. This is seen in the surge in insecure forms of work, such as the use of zero-hours contracts and low-paid self-employment. Some 3.6 million workers are in some form of insecure work. 

If business slows down then managers can simply cancel shifts and the worker takes the hit in their wallet. Helpfully for employers, workers reliant on the whims of bosses for work are less likely to push for improvements to wages or conditions.

If a company decides they want to slash their wage bill they can also pursue fire-and-rehire. During the pandemic opportunistic employers dismissed (or simply threatened to dismiss) workers only to re-engage them on lower wages and often more insecure contracts

P&O took this one step further with ‘fire-and-rehire on steroids’ that saw them effectively buy their way out of legal requirements such as consultation with workers over planned job losses. In place of a decently-paid unionised workforce they hired agency workers, some paid as little as £2 an hour.

This isn’t some natural phenomenon but aided by deliberate policies implemented by successive Tory or Tory-led governments. The Coalition government doubled the qualifying period for employees to claim unfair dismissal to two years in April 2012. This hits young and female workers in particular, who tend to have shorter service.

A year later they halved the 90-day consultation period where 100 or more redundancies were proposed, reduced to 45 days. This makes it much harder for unions to negotiate changes to minimise the effect of potential job cuts. Indeed, at P&O Ferries, management just ignored the stipulation altogether.

Underpinning this shift in the risk is a legal regime that makes it incredibly difficult for unions to recruit members, negotiate with employers or take industrial action. This reached its pinnacle with the notorious Trade Union Act 2016 which erected a dizzying array of hurdles for unions with the temerity to pursue industrial action.

A reflection of ministers’ priorities is that while the pandemic raged and the economy stuttered, they still found time to quietly push through Parliament new rules imposing a levy and other new burdens on trade unions. The result is that when the economy starts to stutter the lack of protection for workers incentivises employers to slash their wage bill ahead of making other savings.

Ministers have the means to make the necessary reforms to aid workers facing emboldened bosses and a limping economy, but have chosen to do the opposite. 

One of the first post-election actions of the current government was to promise an Employment Bill. This would, ministers said, make Britain the best place in the world to work, including by giving greater rights to workers on insecure contracts. It could also have been used to ensure that the sorts of legal requirements dodged by unrepentant P&O boss Peter Hebblethwaite had more teeth in future.

Despite being promised on more than twenty occasions, the Employment Bill was ditched from yesterday’s Queen’s Speech. In its place was a Brexit Freedoms Bill, which threatens to remove existing workplace rights and protections. A government serious about levelling-up would realise that the best long-term way to improve workers’ lot is to ensure that workers have more power in the workplace.

An important report published by the International Labour Organization, which brings together employers, workers and governments, acknowledged the crucial role of collective bargaining in reducing inequality and supporting economic activity.

In particular it noted the importance of such bargaining, where workers and employers thrash out terms and conditions, in tough economic times. It said: ‘Collective bargaining can help to forge resilience in the short term, facilitating the trade-offs required to ensure business continuity and save jobs and earnings, while transforming work practices in the long run.’

Unions have had some notable success in securing better deals for members in recent months. Currently they are doing this in the face of restrictive laws and a government unwilling to confront any of the challenges of the modern workplace. But, despite their efforts, if ministers continue to sit on their hands, we could see many more P&Os in the coming months and years.