Milton Friedman famously stated that the primary obligation of businesses is to pursue profit. This principle holds true, but as Javier Milei, the president of Argentina, highlighted last year, it may not encompass the full responsibility of businesses. Companies also need to advocate for the freedoms that foster open markets and drive prosperity, as few others will take on this role. His warning is particularly pertinent as Labour introduces extensive new employment rights, potentially including a “right to flexible working”.

This week, the Trades Union Congress, Age UK, and various other advocates have launched a campaign for these new mandates, countering what they claim is undue “relentless scaremongering” from Conservative MPs regarding job and productivity impacts. They argue that rights relating to flexible work would enhance both employee morale and productivity, with the TUC even calling for businesses to include a range of flexible working options in their job postings. Their message is clear and uncompromising.

In contrast, the response from British business lobbies has been relatively subdued. The Confederation of British Industry (CBI) previously asserted that a ‘right’ to flexible working is unattainable due to the multitude of forms it can take. However, since the general election, the CBI has adopted a more reticent approach. As Sir Keir Starmer hailed “the most significant enhancement of workers’ rights in a generation” during Labour’s annual conference, CBI director-general Rain Newton-Smith spoke about a “shared struggle” between businesses and the government, disregarding the fact that 58 percent of CBI members believe the proposed flexible work mandate would detrimentally affect the labor market during this parliamentary term.

Other business organizations share a similar reluctance. The Federation of Small Businesses expressed it is merely “worried” about the government’s proposals, while Alexandra Hall-Chen from the Institute of Directors timidly encouraged the government to “meaningfully engage with business regarding the details of its proposed reforms”. The sentiments of her members are more straightforward: 57 percent believe that these new rights could lead to a decrease in hiring.

What accounts for the inability of our business organizations to firmly uphold the fundamental principles of a free market? In a labor market driven by flexibility and free contracting, businesses compete to provide attractive compensation and work schedules to prospective employees. Workers evaluate these offerings against their needs and alternative employment opportunities. When both parties arrive at voluntary agreements, these arrangements are mutually beneficial, or they simply wouldn’t exist.

Flexible working arrangements are already pervasive in the UK, primarily due to the principles of free negotiation. Over 4.2 million workers enjoy flexi-time, 2.1 million operate on annualized hours, and 1.3 million engage in school term-time contracts. Approximately two-fifths of employees occasionally work from home, with 8.3 million in part-time positions and 88,000 sharing jobs. Flexible working is thriving where businesses and workers agree that it is effective.

It is absurd to claim that the success of these voluntary arrangements warrants a comprehensive government mandate, particularly one that would be enforced through the threat of employment tribunals. This logic contradicts basic reasoning.

Many businesses currently shy away from offering flexible work options for fear that it may impact efficiency negatively. Implementing flexible arrangements often necessitates in-office coverage, additional training, novel supervisory methods, costly software upgrades, and the potential decline of in-person collaboration that can negatively affect various business models. The belief that Angela Rayner, the deputy prime minister, can better assess these firm-specific trade-offs than individual managers is misguided — particularly given that the profit incentive motivates companies to make the right decisions.

The economic implications of establishing a “right to flexible working” are relatively straightforward. In sectors that rely on synchronous work — such as client services, production lines, and collaborative teams — a statutory requirement could lead to inefficiencies, delays, and diminished performance. Companies may respond to the resulting harm by reducing essential employee wages, scaling back operations, or becoming reluctant to hire individuals likely to request available flexibility, such as parents with young children.

Yet, despite awareness of the detrimental effects this policy could create, our business organizations remain timid. Instead of advocating for economic liberty and addressing the government’s idealistic views, they have opted to hedge their positions and take a cautious approach. The lack of firm business leadership in defending free-market principles contributes to the ongoing increase of regulatory burdens, which are gradually stifling economic growth like weeds choking a plant’s roots.

Ryan Bourne, an economist at the Cato Institute, is the editor of the book The War On Prices