Business leaders warn Starmer that Labour’s proposed reforms to union power could damage investment and economic growth

Business leaders are urging Sir Keir Starmer to reconsider plans for a significant expansion of trade union powers, warning the move could hamper economic growth and deter investment in Britain.

The Labor Party is reportedly developing proposals that would force companies to recognize and negotiate with unions, even if only a minority of workers are union members. These measures could also give unions a new ‘right of access’ to workplaces, allowing them to recruit and organize within companies that currently have no union presence.

The proposals have raised concerns among employers and business groups, who fear they could be ‘held to ransom’ by small groups of activists. These concerns were reportedly raised during a recent meeting with Deputy Prime Minister Angela Rayner and Business Minister Jonathan Reynolds.

Some senior Labor figures have advised Starmer to moderate the proposals, warning that too aggressive an approach could undermine business confidence and investment, especially as Labor has prioritized economic growth in its policy platform.

Under current laws, unions must demonstrate majority support among workers to gain recognition, and at least ten percent of workers must be union members before voting can take place. Labor’s proposed reforms would simplify these rules, remove the 50 percent support threshold and allow unions to gain recognition with just a simple majority.

However, business leaders are alarmed by the potential impact. One director of a leading FTSE company expressed concerns about the future of industrial relations in Britain, noting that unions are already preparing to use the proposed new powers. The Confederation of British Industry (CBI) echoed these concerns, highlighting the risk of deterioration in industrial relations if unions representing only a minority of workers were given bargaining rights.

Matthew Percival of the CBI said: “While the business community supports worker representation, it is crucial that unions only negotiate on behalf of those who actually want to be represented. Forcing companies to work with minority unions could lead to worse outcomes for everyone involved.”

Kevin Hollinrake, the shadow business secretary, also raised concerns, suggesting that Labour’s proposed reforms, combined with changes to strike laws, could allow a small group of workers to exert disproportionate influence over companies.

Despite these warnings, Paul Nowak, secretary general of the Trade Union Congress (TUC), defended the proposed changes, arguing that the recognition of unions benefits both workers and companies. He claimed the government’s plans would prevent “union-busting” tactics and ensure workers have the right to decide their representation.

As Labor prepares to unveil these reforms in the autumn, business leaders are calling for thorough consultation and careful consideration of the potential economic impact. Jane Gratton from the British Chambers of Commerce urged the government to ensure any changes are both proportionate and affordable, stressing the need for dialogue with the business community.