Employment Rights Bill (Third sitting)

Chris Murray Excerpts

Committee stage
Thursday 28th November 2024 Public Bill Committees

[Steve Darling]

Q My constituency, Torbay, is sadly in the upper quartile of the most deprived constituencies. I would welcome your reflections on how the Bill could have an impact on constituencies such as mine where there are high levels of deprivation.

Nye Cominetti: Well, I have a few caveats. First, overall employment rates are lower in high-deprivation areas, so we need to remember that all these measures will have an effect on workers, rather than those who are not working. If you want to improve income levels, this is not the place to do it. As I was just saying, however, we know that low-paid workers experience those issues of insecurity at higher rates than high-paid workers.

You also need to remember that there is not a one-for-one overlap between high pay and high income and low pay and low income. Some low-income households will have higher-paid individuals in them, but because of having a large family or having only one earner rather than two, they will still end up in that low-income category. That caveat aside, it is still the case that any measures that improve working lives for low-paid workers will have the biggest impact on lower-income households.

There are questions about what the knock-on effects are going to be. If you were really optimistic, you might say that some of these measures to improve job quality could even have a positive labour supply effect. We know that, in the 2010s, that was a big driver of improved income at the bottom and massively increased employment among low-income households. So an optimistic take on these measures might be that you could trigger some of those kinds of effects, but that is much more uncertain.

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

Q Could you say more about the impact of the current system of zero-hours contracts on the individual and, more broadly, on the wider economy and the labour market? I am thinking about poor retention, disengagement and the impact on the benefits bill. How does that system affect the economy currently?

Nye Cominetti: That is a tricky question. If measures to tackle zero-hours contracts are put in place effectively, I think that they will mainly smooth the income of those individuals rather than necessarily raise their level of pay. There might be a knock-on impact on the level of pay if workers have better outside options and can more readily bargain for pay increases or shop around for jobs, but the first effect that you would hope to achieve through these measures is smoothing pay—taking away the volatility from week to week. There is plenty of evidence that that is the element of those jobs that households struggle with most, not the level of hourly pay.

We know that, through minimum wage action, we have massively improved earnings for the lowest-paid workers, but it is the volatility that is most difficult to deal with, as I think anyone sitting here would readily agree. If someone is thinking, “Next week, my pay might go down by 20% or 50%, or maybe my hours will be zeroed down entirely,” it does not take much for us to imagine the impact of that not just on their wellbeing and psychology, but on their spending decisions. They might think, “I can’t afford to commit to that spending now, given that I’m uncertain about what my pay is going to be next week.”

If these measures are done well and genuinely smooth the incomes of those experiencing the worst volatility, I would expect improvements in individuals’ wellbeing. Potentially—again, more optimistically—you might see knock-on positive effects on the economy more broadly, if people feel more comfortable spending because they know what their pay is going to be in future. But as I have said a few times, that is definitely much more uncertain.

[Chris Murray]

What about worker retention? That was the other question—

[The Chair]

Order. Excuse me, but we are getting very tight for time.