LABOUR’S plan to overhaul worker rights has been branded a “stealth tax” that could hammer wages and leave hardworking families out of pocket.
A bombshell report from the Institute of Economic Affairs (IEA) warns that making flexible working the “default” will clobber the economy with hidden costs.
While the government claims the new Employment Rights Act will help staff, experts say the move is a sneaky way for ministers to look popular while forcing businesses to pick up the bill.
The study, titled Is Flexible Working?, warns that the new “right to request” flexible working will be almost impossible for managers to refuse.
Report authors Professor J.R. Shackleton and Annabel Denham argue that the bill for these rules will eventually be paid by the workers themselves through lower pay, fewer jobs, and higher prices in the shops.
Former Cabinet Minister Lord Frost, now Director General of the IEA, said the Government likes to legislate popular measures while asking others to pay for them.
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He said: “If flexible working is in all parties’ interests, then nothing stops it happening now.
“If it isn’t, but is effectively compelled by the government anyway, then it becomes a new stealth tax.
“The costs it imposes will show up as lower pay, fewer jobs, higher prices, or reduced investment – and eventually in lower productivity and prosperity for everyone.”
The report also highlights a “productivity gap,” especially in the public sector.
It suggests that while high-flying professionals might benefit, the rest of the economy will suffer from “coordination problems” and lost training opportunities.
Research has also shown that home working can lead to mental health issues and lower wage growth, with some remote workers seeing their pay rise between 2% and 7% slower than those in the office.
Professor J.R. Shackleton, co-author of the report and Editorial and Research Fellow at the Institute of Economic Affairs, said: “Flexible working is rarely a free good.
“The costs are real, highly specific and often hidden – and government simply cannot measure them.
“When politicians mandate arrangements which are not freely chosen, the bill is paid elsewhere in the economy, amounting to a stealth tax on working people and taxpayers.”