Businesses will bear the costs of zero hours contract reform

The multi-billion cost of zero hours changes will damage the UK jobs market, the Federation of Small Businesses (FSB) has warned.

It says the government’s Impact Assessment of its proposed changes to the rules around zero hours contracts shows that businesses will bear heavy costs, with the risk of pushing up unemployment and narrowing pathways into the workforce.

Commenting on the assessment, which suggests a £3billion cost to businesses from zero hours reforms, Tina McKenzie, interim national chair of the FSB, said: “The new government risks the same old soaring unemployment if it carries on the same old chaotic approach to employment reform.

“With more than 150,000 fewer people on payrolls than when Labour came to power, small businesses have been hoping that the new government would follow the Prime Minister’s lead and start a more positive conversation with businesses – not sneaking out a multi-billion-pound cost to business without even bothering to quantify the number of people who will be left out of work claiming benefits as a result of policies that make no sense.

“The government needs to recognise that employers having people on their books – without guaranteeing a set number of hours – is part and parcel of how many people enter work.”

She added: “If the new government is going to be able to look those seeking work in the eye, it needs to pause these wrong-headed reforms before they damage workplaces, workers, and those out of work.

“Ministers should take political ownership to find a positive-sum solution. Small businesses are keen to give the new government a chance, but not to allow the last jobs horror show to repeat itself.”