Monthly Archives: June 2016

The business of the June Referendum and labour citizenship in the EU: what’s good for workers?

By Gabriella Alberti, Liz Oliver, Ian Greenwood and Chris Forde

Media coverage on the forthcoming Referendum over the UK’s membership of the EU continues to be dominated by economic predictions and intra/inter party posturing about the potential effects of Brexit. What is often lacking in the public media is an analysis of the substance of Cameron’s negotiations with the other EU members, and in particular, the consequences of a Leave or Remain decision for the employment rights and social protection of working people (including migrants) in the UK and in the EU. In what follows we bring together the expertise in CERIC as labour and legal scholars with the hope of sheding some light on the all too often empty debate on the consequences of leaving or staying in the EU, with the additional hope of bringing in some more international flavour. Our focus is on two elements of the negotiation: free movement of labour in the common market (in the context of a ‘Remain’ vote) and the protection of worker rights (in the context of a ‘Leave’ vote). We argue that while the agreement reached last February to meet the UK government’s conditions to Remain constitutes an important step to chip away at the equal treatment rights for all mobile workers in the EU, the Brexit scenario would have even more detrimental effects on the employment and bargaining rights of both UK nationals and migrants.

The untold story behind the Brexit debate: redrawing borders and labour rights

First, we look at the current state of negotiations over the free movement of labour. Motivated by attempts to forestall the exit of the UK from the European Union, the ‘set of arrangements’ put in place on the 18 and 19th of February 2016 to ‘address the concerns of the United Kingdom’ spans seven texts and covers many areas of EU competence. Even though the proposed revisions in the area of free movement do not introduce all-encompassing changes to the core principles of the common market for labour, good and services they represent a symbolic step away from the twinning of the free movement of workers with the principle of equal treatment for EU mobile workers with citizen workers of a member state. It is our view that in the context of membership of the EU’s internal market this equal treatment principle must go hand in hand with the free movement of workers in order to prevent a ‘race to the bottom’ and ‘social dumping’. The following sections consider the impact of the arrangements underpinning the UK’s continued membership of the EU on mobile workers (UK nationals living and working in other member states and nationals of other EU member states living and working in the UK).

Those aspects of ‘the set of arrangements’ that deal with migration comprise section D of the Decision Concerning a New Settlement for the United Kingdom within the European Union (which would become binding on the Member States in international law), and three Commission declarations, namely: one relating to child benefit exports, a second concerning the so called ‘emergency break on in-work benefits’ and the third addressing purported abuse of the right of free movement of persons (dealing with residence rights for non-EU family members and powers to deport EU national criminals (these are a political commitment by the Commission). The Decision will take effect upon the UK deciding to remain in the EU and if the changes it contains go ahead they would have consequences not only for the UK but for all EU Member states.

In the area of free movement, the declarations set out the Commission’s political commitment to change some of the secondary legislation that forms part of the framework for the free movement of persons. These amendments would not come into force automatically and it is not guaranteed that they would get through the EU’s legislative procedure, but through the Decision the Heads of State or Government legally bind themselves to “do all within their power to ensure [the] rapid adoption” of proposals in the area of the emergency break and child benefit. We focus our analysis on the emergency break because we think it is important to highlight the exception that it would create to the principle of non-discrimination.

What concerns us is that these arrangements contain the seeds for the erosion of the long-standing connection between freedom of movement and social protection for internal migrants in the EU common market (our focus is on workers who have generally enjoyed more extensive rights to equal treatment in the area of social benefits than other mobile EU citizens, since access to equal treatment is dependent on economic activity, degree of integration in the host state and the nature of the benefit claimed). This connection forms an important aspect of the protection of social and labour rights in the EU more broadly.

Tensions between internal market law and social and labour rights for EU citizens are increasingly recognised. In late 2015, we co-authored a Report with Prof Dagmar Schiek which explored the ways in which traditional interpretations of EU internal market law caused tensions and frictions for the protection of social and labour rights. All EU citizens can enter and reside freely in any EU country for three months but beyond that, residence and equal treatment rights differ depending on economic activity with workers or self employed people enjoying much more extensive rights. Such equal treatment in the field of social rights is meant to prevent a downward competitive pressure for all workers within the EU. As we argued in our report with Schiek:

“Putting equal treatment at the centre of the free movement of workers…not only corresponds to the Treaty’s demands, but also helps prevent the downward spirals of wages and employment conditions which may lead to contraction of Europe’s economies.” (p.22)

As also noted by the TUC, safeguards of this sort have reduced the risk of negative froms of competition that are inherent to participation within the internal market whereby member states compete on the basis of poor pay and conditions and reduced employment protection; the so called ‘race to the bottom’. Such protection is a necessary ingredient of participation within the internal market.

As we will show below, the new set of arrangements agreed in February thus creates the risk of a detrimental impact on the exercise of an important social right by internal migrants (that is both UK citizens living and working in another Member State and EU citizens living and working in the UK) and also starts to unpick (albeit in a modest way) some of the ways in which the harsher effects of membership of the internal market are modified. On the other hand the Brexit option, by opening to scrutiny the existing layers of social and labour protection that come from membership of the EU may well lead to even more detrimental effects for UK citizens.

Consequences of the ‘emergency break’ for the rights of moving workers

What has been highlighted less in debate is how – even with a Remain vote in June – the measures considered in the February Decision have the potential to undermine an important aspect of the framework for the free movement of workers, namely that a mobile EU worker should “enjoy the same social and tax advantages as national workers”. The Decision outlines a “safeguard mechanism” that would resond “to situations of inflow of workers from other Member States of an exceptional magnitude over an extended period of time”. In its declaration, the Commission sets out plans to table a proposal to amend Regulation (EU) No 492/2011 in order to bring this mechanism into being. Should the amendment go ahead (and withstand challenge), the mechanism popularly referred to as ‘the emergency break’ would be brought into being. Through this mechanism Member States would be able to withold access to non-contributory types of in-work benefits (like tax-credit and housing benefit). Nevertheless there are limitations on the circumstances in which the emergency break could be used and Member States must follow a procedure (which would involve a proposal from the European Commission and approval of the Council) before it could be used. The circumstances in which the use of the emergency break could be contemplated are: “an exceptional situation…on a scale that affects essential aspects of its social security system, including the primary purpose of its in-work benefits system, or which leads to difficulties which are serious and liable to persist in its employment market or are putting an excessive pressure on the proper functioning of its public services”. In this limited way EU member states could be authorised to discriminate against EU migrant workers in their access to non-contributory types of in-work benefits (i.e. wage subsidies usually provided for low-income workers). This ‘emergency brake’ is seen to over-ride the principle of equal treatment of EU workers; would be enforceable for a maximum of seven years and would apply to all ‘new arrivals’ for a maximum period of four years from the date of commencement of employment.

Why does this tightly defined exception concern us? With the ambition of going back to some issues in the debate that are rather taken for granted, we would like to emphasise the questionable assumptions behind the substance of this aspect of the agreement: that migrants who access this type of benefits seek to take advantage of the “generosity” of the host country’s welfare system, which would represent a magnet towards the country of immigration. This mythology of welfare tourism at the basis of current political compromises, is in fact far from what empirical evidence suggests (Touchstone 2014, Centre of European Reform 2016). Contrary to the idea that migrants represent a burden on public resources (a principle unfortunately legitimised by the current declaration) migrants are clear net contributors into the welfare systems of host countries (see OECD figures reported by INCA 2016). More broadly, the February agreement looks to amend the principle embedded in the regulation over free movement of workers (which is also central to EU regulations on the coordination of social security) in the EU.

equal pay women

In this context it is worth revisiting the origin of the free movement and social rights principles embedded in Article 45 of the Treaty on the Functioning of the European Union and Regulation (EU) No 492/2011 on freedom of movement for workers within the Union (and other provisions dealing with access to social security), the backbones of the regulation of the free movement of workers. Caldarini and Goldman (2016) note that if we look at the roots of the EU socio-legal architecture, alongside the core freedoms of movement for goods, services capital, and labour, the principle of social security for migrant workers established in the Treaties rests on the idea that, “to encourage the mobility of factors of production (labor) it is necessary to neutralize the discriminatory provisions on grounds of nationality present in the different national social security systems”. In other words, whilst wanting to encourage mobility, the principle of social security provision was not “a truly social measure” but was seen as a necessary element to grease the wheels of the newly constituted common market providing an incentive for European workers to move elsewhere for work.

The re-negotation of EU regulation on social benefits for mobile workers, under the pressure of the threat of Brexit thus risks in our view a potential further stratification of labour and social rights, even for workers who have traditionally enjoyed robust residence and equal treatement rights. A concerning scenario is one where even those who will continue to have the right to work in a host country will be officially treated as second class citizens in the EU. In our view this this is a basis to make these workers even more vulnerable to explotiative practices and lower pay. This will exacerbate the problem of social dumping under the overall rhetorics of ‘protecting the borders’ and the welfare state from alleged abuse. In sum, as a consequence of the battle against the assumed ‘social benefits fraud’ the reality of social dumping would thus come to replace the myth of welfare tourism thus engendering a downward pressure of labour conditions for all citizens and migrant workers.

Considering the potentially dangerous effects of the principles included under the political agreement reached by the EU 28, an outsider looking at the business of the Referendum may wonder: is Brexit then the answer to avoid a downward negotiation of EU minimum social and working standards (for the rest of EU citizens)? Given the EU origin of many of the current regulations protecting workers’ rights and the detrimental impact of curtailing social rights for migrants’ bargaining power in the workplace we are confident in saying that Brexit may lead to even worse effects for all those working in the UK.

 Impact of Brexit on workers’ rights and legal issues

The first thing to say about the impact of potential Brexit on UK workers rights is that what will happen to national employment law as a result really isn’t clear cut. This will very much depend on two main contingencies; the nature of the future relationship with the EU and then the political climate and responses at national level. The process of withdrawl from the EU entails negotiating a future relationship and the outcome of the process is an agreement setting that out. The agreement may entail social obligations. If for example the relationship between the UK and the EU resembaled that between Norway and the EU “the Norway Option” then the UK would still be obliged to comply with EU social law that is relevant to the European Economic Area (including the free movement of workers). The second thing to say flows from the first, change wouldn’t happen automatically as a result of a vote to leave the EU, the outcome of EU level negotiations will, in turn, shape national political responses in the realm of employment relations and employment law. That said very many of the employment rights that have come to be expected as part of an employment relationship in the UK derive from EU law. Should the UK no longer be obliged to maintain these as part of its obligations under whatever relationship it has to the EU, then their future becomes much less certain.

Space does not afford a full description of how EU law shapes national employment law here, moreover a full and detailed analysis of this sort has been completed by Michael Ford QC on behalf of the TUC . Drawing from Ford’s analysis the following list demonstrates that the impact of EU law on employment in the UK reaches far and wide:

  • key rights in the area of discrimination;
  • pregnancy, maternity and parental leave;
  • protection for atypical workers (part-time, fixed-term and agency workers);
  • working time (which includes paid annual leave);
  • collective rights (collective consultation in the context of redundancy, the transfer of undertakings, on questions relating to health and safety, transnational information and consultation, information and consultation of employees);
  • rights of employees in the event of a transfer of undertakings (for example a business transfer or service provision change);
  • certain areas of health and safety;
  • employee rights against employers who are insolvet;
  • right to a written statement of employment particulars;
  • aspects of data protection at work;
  • the rights of workers posted from the UK to work in another Member State;
  • the free movement of workers in the EU.

The risk of legal uncertainty caused by outright deregulation of all these provisions is great and it would be unworkable simply to sweep such legislation aside. Others have argued that a simple repeal of the European Communities Act would not be effective and it doesn’t seem plausible that the future development of employment law would be decided on a binary distinction between what is rooted in national law and what came from the EU. Surely a political review would be based on the substance of the legal protections and the merits thereof. Even if a binary approach was to be considered, the process of identifying what is an EU provision and what is a national one is complicated by the interrelationship of national and EU law. Some nation laws (such as those dealing with race discrimination or disability discrimination) preceded EU level regulation but were later modified as a result of the development of EU law. Moreover normative approaches to employment regulation have been shaped by soft legal mechanisms that promote policy coordination and exchange at EU level (for example through the European Employment Strategy). Whatever approach is taken, the key point is that exit from the EU may open these rights up to scrutiny.

The ways in which Brexit could impact on the national level regulation is certainly not straightforward but that is not to say that there would be no impact at all. In his analysis of the impact of Brexit on annual and parental leave, employment lawyer Philip Landau concluded that “Although the rules emanated from the EU, it would be politically unthinkable for the government to reduce these allowances.”. So what would be ‘politically thinkable’? Ford argues that it would be naïve to assume that any of the rights listed above would be immune from repeal. Our view is that a government with a deregulatory agenda can make important changes to employment law that are far reaching yet subtle, even where whole-sale deregulation would be politically unworkable.

To illustrate the above point let’s to look at the changes that were made in the area of unfair dismissal under the previous government. The law of unfair dismissal is a major employment right in the UK and, as a national provision of employment law, was open to scrutiny under the ‘Employment Law Review’ and the ‘Red tape challenge’. Even with the Coalition Government’s expressly deregulatory agenda it would have been politically unthinkable to repeal (or to use the words of Adrian Beecroft “do away with”) it. Nevertheless taken together, several of the changes made to unfair dismissal law have major implications for its practical effect. Firstly the legal coverage of the right contracted when the qualifying period was increased from one to two years, then the actual coverage of the right was curtailed by the introduction on employment tribunal fees and the categorisation of unfair dismissal as a ‘type B claim’ which attracts the higher level of fee (issue fee: £250, hearing fee: £950 total £1200) making it harder for low-earners to contemplate enforcing their right. Finally with the introduction of a new approach to settlement agreements important procedural aspects of a fair dismissal can be circumvented. Taken together these changes have far reaching implications for the relevance of this right in the work place.

This section could not tackle precisely how Brexit would impact on national employment law (much is unknown), nevertheless what it is clear is that the exposure of the extensive range of rights now guaranteed through membership to EU law to political reappraisal would open up the possibility of deregulation. It should be bourn in mind that where a government has a deregulatory agenda it may be politically possible to radically reduce the protection afforded by such key rights even where wholesale repeal is ‘unthinkable’.

 workers blue collar

Trade unions and Brexit

Although amongst UK trade unions, opinion is divided as to the benefits of leaving the EU, the leaderships of UK unions are, in the main, in agreement that although the EU requires reform, the benefits of staying in, outweigh those of exit. Unions argue that, although at the EU’s political heart there is a growing allegiance to business and, through the strictures of its financial institutions, a commitment to deflation, the idea that outside the EU lies a world that is not increasingly in thrall to the needs of finance capital is, nevertheless, a curious one. At its core, the left debate on Brexit centres on a fundamental question: will, European capitalism be weakened or strengthened by Brexit? A crucial question that flows from this analysis, is that workers’ rights and their ability to enforce these, will be either strengthened (Brexiters) or weakened (Stayers).

The two largest UK unions Unite and Unison, will be urging their member to vote to remain in the EU. That Brexit would not be in the interests of their members. They cite the noises coming out of Conservative Central Office that following Brexit, and a lurch to the right, health and safety regulations will be diluted and the labour market made more flexible. Dave Prentis, General Secretary of Unison believes it is an illusion that the public sector will be better served by Brexit. The Tories already pushing ahead with marketization will be emboldened. He also calls for unions to work solidaristically within the EU with unions and social movements transnationally for progressive reform of the EU rather: an international labour solidarity to match that of business.

The Executive Committee of Unite, the UKs largest manufacturing union, whilst calling for reform of the social dimension of the EU, is again urging members to vote against Brexit. A major concern for Unite is that a major contraction of UK manufacturing industry with its relatively high wages, skills and R&D spend, will accompany Brexit. A further concern for Unite is the impact of Brexit on the ability of the UK to negotiate trades deals that benefit workers. The bargaining influence of a trade block of 500 million people far exceeds that of a single country. The example of the steel industry is illuminating. Whilst there are problems with some aspects of EU policy, for example the opposition of the UK government to strengthening Trade Deference Agreements, the ability of the EU to negotiate as if was a single country is the only bulwark against annihilation of the UK steel industry. To sum up the impact of Brexit on workers rights and living standards is of course unknown but rests on assumptions made at two (connected) levels. One level is ideological, the other pragmatic. It might be argued that unions are adopting a largely pragmatic line.

Conclusions

To conclude, we may consider these sets of reflections as a general invite to endorse a less nationalistic stance to an essentially non-national issue such as the question of belonging or not to a regional political and economic community (and for some one with relative progressive social ambitions, for others more contradictory) such as the EU. Even more the above reflections may help shifting the gaze so to consider the impact of a potential exit of Britain from the EU from the point of view of the labour conditions and social protections not only of ‘nationed labour’ but for all moving workers, including the many Britons currently working and living in other EU member states. A further and critical step would be to look at the potential for alternative labour organising responses to the questions of the social effects of free movement of labour, and what staying in the EU may offer in terms of promoting a transnational labour solidarity that matches that of business.