Labour’s tax and employment laws have pushed businesses to a “dangerous precipice” which are pricing young people out of work, leading industry groups have warned.
New sick pay laws championed by Angela Rayner will come into force on Monday, with trade groups warning that corporate Britain is under mounting strain as unemployment is at a five-year high and youth joblessness now higher than the EU average.
The Confederation of British Industry (CBI) warned that the country’s jobs market risked becoming less flexible than France, adding that businesses were struggling to absorb the extra costs.
“We have reached a dangerous precipice for business when it comes to employment costs,” said the CBI’s Matthew Percival.
“Alongside NICs and business rate increases, the National Living Wage has gone up by 34pc in the past four years.
“Something has to give. Unfortunately the consequence is that investment is stymied, growth is on pause and young people are being priced out of the labour market.”
New privileges for workers as part of the Employment Rights Act (ERA), which was led by Ms Rayner when she was deputy prime minister, will give staff the right to statutory sick pay from their first day of absence, instead of the fourth day.
The law, coming to force on Monday, will also give new fathers enhanced paternity rights.
However, small business owners warned that they were likely to bear the brunt of sick pay changes at a time when costs are rising quickly against the backdrop of the Iranian war.
Many bigger firms already offer sick pay from day one.
Craig Beaumont, of the Federation of Small Business (FSB), said the changes would punish those willing to hire people with health issues.
“Charging employers every time someone throws a sickie is a recipe for fewer jobs, worse productivity and a harder time for businesses,” he said.
“Worse, it disadvantages those who are actually unwell and struggling in work – it hits the firms who employ people with health problems, the hardest.”
Mr Percival said the new laws would leave firms with “little protection against somebody claiming to be sick when they are not”.
The changes will also mean British workers will now receive sick pay faster than workers in France, even though they still get less money overall.
Leading firms in the City have already warned the Government that parts of the Employment Rights Act will leave Britain’s employment laws worse than France.
Law firms and big banks have told officials that new rights that will put bankers and lawyers in line for unlimited payouts if they win unfair dismissal claims will discourage investment.
