Category Archives: EU

The ‘Made Smarter’ review: a road to utopia or dystopia in negotiating the future of skills, apprenticeships and work?

By Maisie Roberts, CERIC Postgraduate Researcher

pandora's box

Junge, A. 2005. Pandora’s Box #1: Found Toolbox with Neon

The future of work: dystopia or utopia?

The recent industry-led independent Made Smarter review chaired by Professor Jurgen Maier, CEO of Siemens, provides a future vision of the UK’s industrial landscape in terms of advancing the remit of digital technology. Training and upskilling are central components of achieving a utopian future vision. However, the future of work seems to hinge on Maier’s warning (2017: 11):

“Get it wrong, and we risk further de-industrialising our economy, and becoming ever more reliant on imports. Get it right, and we will have found the key to rebalancing and strengthening our economy, creating many new, exciting, and well-paid jobs, and leading a renaissance for the UK as a true nation of creators and makers.”

From this perspective, the future of work remains a highly contested point of discussion, centred on two extremes, which either seem to epitomise a utopian land of promise or a scaremongering nightmarish dystopia. Indeed, when we think of the future of work we conjure up rather dystopian images of the superiority of artificial intelligence-driven robots who have the power and skill to take over the whole spectrum of work, leaving us without any hope of meaningful work. Precarious employment contracts, disposable workforces, intensified working hours and minimal employment rights are already a sad reality. Beyond this the underworld of Silicon Valley casts an unsettling shadow over society where our digital footprints are tracked, extradited and sold to feed a dystopian-like machine. Has Pandora’s box been opened with no return? And what’s the alternative?

 Trouble in utopia?  Skills and the fourth industrial revolution

 Currently, technology, innovation and digitalisation are key incentives for national economies and skills and training are viewed as essential in achieving aptitude in this area. Economies are revising their technologies and capabilities in line with this so-called ‘fourth industrial revolution’.

The first revolution used water and steam to power production whilst the second relied on electric power for mass production. The third drew on information technology to create automated production lines. The fourth builds on the foundations of the third, but merges physical, digital and biological realms to create new technologies. Amongst other emerging phenomena this includes the rise of big data and the Internet of Things, where cyber-physical systems communicate and exchange data with each other and with humans in real-time.

The process of creating a commodity has therefore changed from one where manual work would physically create a product from raw materials to one where technological and information-led networks shape new “modes of development” in an increasingly globalised context (Castells, 1996). This presents the question whether the nature of skill is changing under this new guise of capitalism underpinned by the “information age”.

This might mean that new skills are needed to navigate between raw materials and new technology, data and software, changing existing job structures as well as creating new jobs altogether. Here, skill is therefore essential to facilitate technological advancement. Indeed the World Economic Forum (2016) calls for complex problem-solving, creativity, critical thinking and teamwork amongst other skills, which are viewed as essential in navigating us into a utopian future of the fourth industrial revolution.

Conversely, there could be a move to the growing but rather dystopian phenomena of a so-called ‘lights out’ methodology. Under this approach, human labour becomes obsolete as factories become solely operated via automation with the ‘lights out’ to save on production costs, increase profit margins and respond to increased customer demand. Frey and Osbourne’s (2013) infamous paper, which estimates that 47% of all US employment is susceptible to computerisation certainly plays to this analogy.

Uncertainty ahead: The case of Germany and England

The fourth industrial revolution still remains very much a future vision, and one, which is not yet fully realised. How skills strategy integrates into the future vision of work remains uncertain as demonstrated by Germany and England.

Germany

The ‘dual’ German apprenticeship system adopts a corporatist and coordinated approach, in which both firms and vocational schools provide highly structured training (Bosch, 2010). Apprenticeships are protected from market forces in an almost utopian enclave where unions, chambers, employers and the state work collectively and pro-actively together to regulate the future path of the system.

Although Germany seems to epitomise a perfect apprenticeship system, it, too, is facing significant challenges. Previously up to 75% of young people would typically undertake an apprenticeship (Grugulis, 2007) but since 2013 university starts has overtaken apprenticeship starts and this number is rising (BMBF, 2016). Higher education is becoming a more popular option, much like the UK, with the promise of a free university education and higher graduate wages a key incentive for this choice.

Equally, the entire context and character of Germany’s labour market has changed too with the implementation of the Hartz reforms over 10 years ago, which brought in temporary, agency or so-called ‘mini’ jobs as well as cuts in unemployment welfare assistance. The traditional purpose of an apprenticeship was to provide comprehensive training to catapult an individual into a secure and permanent occupation for life. Yet the evolving fragmentation of Germany’s labour market could undermine the stability, time and effort required to develop well- defined routes to employment.

Germany’s pro-active strategy of “re-imagining work” through its “Work 4.0” concept highlighted in its initial green paper (2015), followed up by its white paper (2017) aims to tackle some of these issues. The reports highlight the need for occupational profiles to be adapted to meet changing skill demands, increasing continuing vocational training, more support for SMEs to develop training and a monitoring system to forecast future demand of skilled labour. The decreasing labour supply of young people is mentioned and as such the report calls for the opening up of skilled labour to more migrants, low-skilled workers, women, older people and disabled people. However, the reports do not seem to directly address the growing prevalence of higher education, which many have argued is leading to growing inequality and a reduction of firms participating (Thelen and Busemeyer, 2012). The future of apprenticeships therefore remains somewhat ambiguous in the Work 4.0 agenda.

England

England’s system is voluntarist and employer-led, with employers solely designing, regulating and managing the system. England lacks the collective ethos and stability of the German system. The English system is also prone to continuous political upheaval, particularly since the Thatcher years where participation in apprenticeships drastically declined (Gospel, 1995).

An apprenticeship levy was introduced in April this year with the aim to increase apprenticeship participation to 3 million apprenticeships by 2020. The levy targets employers with a pay bill over £3million, affecting 2% of firms. However, recent reports highlight that since the levy apprenticeship starts have decreased by 59% (BBC, 2017). Equally, only half of the eligible levy firms have actually registered to reclaim levy funds (CIPD, 2017). This suggests that many firms are disregarding the levy as a tax instead of a social responsibility to invest in apprenticeships. Hence, although the levy has good intentions, perhaps the inherently market-led nature of England’s economy deters employers from investing in the costs and time needed to create high quality apprenticeships.

The recent industrial strategy aims to reform the UK’s technical education system to make it more internationally competitive, invest £406m in STEM skills and create a new National Retraining Scheme to allow people reskill in the labour market. Much like the recent Made Smarter review, training and skills exemplify the road to utopia in the policy discourse. However, UK’s intermediate skills ranking is projected to stand at only 28th of 33 OECD countries by 2020 (UKCES, 2015) and its productivity figures were recently downgraded from the predicted 2% growth for this year down to 1.5%, soon to be followed by 1.3% in 2019 (OBR, 2017), the same rate as during financial crisis.

The Made Smarter review focuses in on these challenges. Firstly, it argues that lack of effective national leadership and cross-sector collaboration has failed to achieve a coherent strategy of industrial digitalisation. Secondly, poor productivity, limited business support, cybersecurity threats and significant skills shortages due to the fragmented apprenticeship system leads to poor levels of adoption of the digitalisation agenda, particularly among SMEs. Finally, the UK’s infrastructure does not support the scaling-up of technology to support companies, meaning that innovation is under-leveraged. As such, the need for training is paramount in the report, which calls for the upskilling of a million industrial workers. Yet the current employer-led approach to apprenticeships in England, where the nature of the market dictates its future, contrasts to this utopian image.

Summing up

 Utopia, true to its definition as both a no-place and a good place, is a useful framing device, which helps us consider what we might want for ourselves in our future society. The Made Smarter review offers us two very different future outcomes, one with new, exciting and well-paid jobs, creating a society of creators and makers, or, an alternative route towards a de-industrialised, stagnant and import-reliant society. Juergen Maier clearly acknowledges that the UK faces a number of challenges in creating his future vision of industry and employment, including poor productivity and infrastructure. Lack of coordination, leadership and collaboration amongst businesses, academia and other institutions are also listed as central concerns.  Interestingly, Germany’s “re-imagining work” white paper actively engaged in a public dialogue and called upon workers, businesses, unions and other institutions to help contribute to the future vision of work in partnership together. This helped to ease the mystery behind the notion of digitalisation and its implications on work, whilst providing a voice for all in navigating towards a collective vision of the future world of work.

From this perspective, we need to ask what skills and work we really value in society today. Apprenticeships, training and skills development can clearly provide increased national productivity, innovation and meaningful job creation if implemented correctly (Finegold and Soskice, 1989). Yet apprenticeships are too often considered as a magical tool to swiftly solve all of society’s problems, such as youth unemployment, deepening skills gaps and productivity slumps to name a few (Keep and Mayhew, 2010), without much consideration of what is actually needed to secure these essentially utopian benefits. If we truly admire the inherent value of skills and apprenticeships as a means to meaningful and productive employment for society, more weight, investment, regulation and prestige needs to be placed on them.

References

BBC. 2017. Apprenticeship numbers fall by 59% after levy imposed. [Accessed 1 November 2017]. Available from: http://www.bbc.co.uk/news/business-42092171

BMBF (Bundesministerium für Bildung und Forschung). 2016. Report on Vocational Education and Training 2016. [Online]. [No Place]: Federal Ministry of Education and Research. [Accessed 1 November 2017]. Available from: https://www.bmbf.de/pub/Berufsbildungsbericht_2016_eng.pdf

Castells, M. 1996. The Rise of the Network Society, 2nd ed. Oxford: Blackwell Publishers.

CIPD. 2017. Half of Eligible businesses register to reclaim apprenticeship levy funds. [Online] [Accessed 1 November 2017]. Available from:  http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2017/10/09/half-of-eligible-businesses-register-to-reclaim-apprenticeship-levy-funds.aspx

Department for Business, Energy and Industrial Strategy. 2017. Made Smarter. Review 2017. [Online] [Accessed 1 November 2017]. London: Department for Business, Energy and Industrial Strategy. Available from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/655570/20171027_MadeSmarter_FINAL_DIGITAL.pdf

Department for Business, Energy and Industrial Strategy. 2017. Industrial Strategy: building a Britain fit for the future. [Online] [Accessed 1 November 2017]. London: Department for Business, Energy and Industrial Strategy. Available from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/664563/industrial-strategy-white-paper-web-ready-version.pdf

Federal Institute for Labour and Social Affairs. 2017. Re-Imagining Work, White paper, Work 4.0. [Online] [Accessed 1 November 2017]. Berlin: Federal Institute for Labour and Social Affairs. Available from: http://www.bmas.de/SharedDocs/Downloads/EN/PDF-Publikationen/a883-white-paper.pdf?__blob=publicationFile&v=3

Federal Institute for Labour and Social Affairs. 2015. Re-Imagining Work, Green paper, Work 4.0. [Online] [Accessed 1 November 2017]. Berlin: Federal Institute for Labour and Social Affairs. Available from: http://www.bmas.de/SharedDocs/Downloads/DE/PDF-Publikationen/arbeiten-4-0-green-paper.pdf;jsessionid=FFFC52E6F5D81905E8B5D4EE90F3E69C?__blob=publicationFile&v=2

Finegold, D. and Soskice, D. 1988. The Failure of Training in Britain: Analysis and Prescription, Oxford Review of Economic Policy, 4(3), pp. 21-53.

Frey, C, B. and Osbourne, M. 2013. The Future of Employment: How Susceptible are Jobs to Computerisation? Technological Forecasting and Social Change, 114, pp. 254-280

Gospel, H. 1995. The Decline of Apprenticeship Training in Britain, Industrial Relations Journal, 26(1), pp. 32-44.

Grugulis, I. 2007. Skills, Training and Human Resource Development: A Critical Text. Basingstoke: Palgrave Macmillan.

Junge, A. 2005. Pandora’s Box #1: Found Toolbox with Neon [Online] [Accessed 1 November 2017]. Available from:  http://www.jungeart.com/assemb/photo_display.php?start=4

Keep, E, and Mayhew, K. 2010. Moving beyond skills as a social and economic panacea, Work, Employment and Society, 24(3), pp. 565-577.

OBR (Office for Budget Responsibility). 2017. Economic Fiscal Outlook. [Accessed 1 November 2017]. Available from: http://cdn.budgetresponsibility.org.uk/Nov2017EFOwebversion-2.pdf

Thelen, K. and Busemeyer, M. 2012. Institutional Change in German Vocational Training: From Collectivism toward Segmentalism. In: Busemeyer, M. and Trampusch, C, eds. The Political Economy of Collective Skill Formation. Oxford: Oxford University Press. Pp. 68-100.

UKCES. 2015. UK Skills Levels and International Competitiveness 2014. [Online] [Accessed 1 November 2017]. Available from:  https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/470017/skill_levels_2014.pdf

World Economic Forum, 2016. The 10 skills you need to thrive in the Fourth Industrial Revolution. [Online] [Accessed 1 November 2017]. Available from: https://www.weforum.org/agenda/2016/01/the-10-skills-you-need-to-thrive-in-the-fourth-industrial-revolution/

 

 

 

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Alexandra Seehaus (Visiting Fellow, CERIC) reviews Oliver Nachtwey’s book, currently only available in German.

Alex Seehaus

Alex Seehaus, Visiting Fellow, CERIC

Oliver Nachtwey’s “The descent society. On Rebellion in the Regressive Modern Age”

Running up a downwards escalator

The election results to the German Parliament on Sunday 24th made a far right nationalist party (Alternative für Deutschland “Alternative for Germany” ) the third biggest party in the Lower House of Parliament. While among the electorate there are nationalist, racists, and neo-nazis, a huge number of people declared they voted for them out of protest against the existing government. Many of those engaging in a protest vote were members of the middle classes with middle incomes, who are afraid to lose their status and class position, due to the increase of migrants and refugees and an increased insecurity. To place this in context and understand some of this background to this turn of events, it is worthwhile to read Oliver Nachtwey’s book which explores changed mobility patterns in German society.

Oliver Nachtwey has offered a staggering account of this phenomenon in Germany, which has made it into the top selling lists of the online bookshop Amazon Germany and was recently awarded with the Hans-Matthöfer-prize for heterodox economic and sociological writing.

Nachtwey sees the social promise that has kept the German society together over the last seventy years as lost. There is no longer an ‘ascent society’ in Germany, but it has instead been replaced by one of descent. The divide between rich and poor has increased and the dynamics of social mobility have changed, to the detriment of those at the bottom. Instead of climbing up the ladder to the top, people are now making a constant effort in order not to descend, simply to hold their position. Given the fact that a majority of the public still seems persuaded by the idea of meritocracy and the belief in collective upward mobility, such developments contradict common expectations. As hard work and ongoing growth were supposed to guarantee constant status improvement, it’s mere absence causes disappointment for employees and is perceived as social descent.
Descent is a problem for society as a whole. It affects not only those whose situation is getting worse, but also causes stagnation and widespread fear. According to Nachtwey such situation is characterised by polarisation and precarity, resulting in an erosion of social integration. What he sees arising in its place is a new social question about the emergence of ‘working poor’ and unequal distribution of wealth and chances for social mobility, which threatens democracy and provokes protest.

The book not only offers a precise analysis of social inequality and struggles within democratic capitalism. Its intellectual strength lies in the way in which aspects – which often remain separate – are brought together. This includes observations on post-democracy, findings on underclasses and precarious working conditions, pressure on middle classes, as well as thesis on stagnating capitalism and low growth expectations.
Nachtwey’s analysis builds on the work of sociologist Ulrich Beck, who depicts the upward mobility in the prospering welfare state of post-war Germany as collective elevator effect. According to Nachtwey, this metaphor has become obsolete, as people no longer move up together. The ‘steady ascent’ has ended with the deterioration of standard employment, flexibilisation, and the dismantling of social security, which went hand-in-hand with former life structures, careers and vocational paths. Instead, the collective and individual dimensions of ascent and descent have come apart. In Nachtwey’s metaphor everyone stands by oneself on the escalator stairs. Those on the top are still moving up, but for a big number of people in the middle and the bottom the direction has changed. They instead attempt to run up a descending escalator. While such an image might be considered somewhat bold, since empirical data shows that individual descent has not become a mass phenomenon and ascent is still possible, it captures the increasing distance between top and bottom as well as the important trend of precarisation collectively faced by a growing number of employees in Germany.

According to Nachtwey, people in Germany have lost trust in the notion of stability. Despite the fact that lower classes, those with less education, older as well as young people, and those with migrant status, struggle in the current labour market situation, middle class people also feel threatened by the potential and actual loss of jobs and social status. The erosion of social integration is therefore not only caused by actual descent, but also collective fear of it, which impedes solidarity. Whether concerning the conflict between employees and unemployed, permanent and temporary staff; residents and migrants; or discrimination between age groups, society has become polarised. And unfortunately this is what we see coming true with the recent elections.

Nachtwey is aware of the potential resentments and reactionary tendencies within the politics and movements addressing the deteriorating situation of the working population, such as those supporting the far right out of ‘protest’. While he points out the dangers of right wing populism, he also has some hope. In identifying the current tendencies as a tension between capitalism and democracy, there is potential for this not only to fuel regressive forms of critique and protest, but also to offer potential to progress towards a more solidaric modern age. It will, however, require progressive forces to engage energetically in efforts to turn the hostile public and political atmosphere around and to channel such tendencies away from right wing populism and towards a more distributory, fair and equitable political landscape.

Why so-called ‘Barista Visas’ won’t help UK Hospitality Workers

Version 2
Matthew Cole

Home Secretary Amber Rudd has recently introduced the idea of a so-called ‘barista visa’, undoubtedly to militate against the potentially disastrous effects of Brexit for UK businesses. The proposal was suggested by Lord Green, chairman of the right-wing think tank Migration Watch UK, who claimed it would, “kill two birds with one stone” by meeting employer needs while “maintaining links with the EU”. By links, he must have meant links to a highly exploitable workforce with no rights. The ‘barista visa’ would allow young European citizens to migrate to the UK and work in the hospitality industry for up to 2 years; however, it would deny them access to benefits, schooling, housing or any possibility of extending their stay. The proposed visa would be modelled on the Tier 5 (youth mobility scheme) visa, which currently allows 18-to-30-year-olds with at least £1,890 in savings from non-E.U. countries such as Australia, Canada, New Zealand, South Korea, and Taiwan to work in the U.K. for up to 24 months. Despite the government’s optimism, the ‘barista visa’ would not only fail to offer adequate solutions to Brexit, it would exacerbate issues in the industry for both employer and employees.

The hospitality industry (including hotels, bars, cafes and restaurants) makes a significant contribution to the UK economy. The industry added an estimated £57 billion to the economy in 2014, roughly 4% of GDP and it employs around 3 million people in the UK.  Since 2011, it has grown by 13%, more than double the employment growth of the economy overall. Yet in the context of this dramatic growth, working conditions remain poor. Average gross earnings for full-time workers in the hotel industry are the lowest in the UK and the industry has the highest incidence of low-paid workers. Added to this is its dubious status as one of the least unionised sector of the economy.

Today, the hospitality industry is experiencing increasing instability and pressure as a result of Brexit. Britain leaving the EU will no doubt have serious and lasting impacts on the UK labour market and workers rights. According to the ONS, E.U. nationals make up 7% (2.2 million) of Britain’s total labour market of 30.3 million. However, some industries will be more affected than others and the hospitality – with over 60,000 workers per annum working in this sector – is likely to be one of those feeling the impact of the referendum result. A report by KPMG indicates that hospitality is the largest business sector employer of EU nationals as a proportion of total workforce. Hotels and restaurants employ the highest percentage of EU migrants with certain roles such as waiters and waitresses (75.3% EU nationals), housekeeping staff and chefs representing a particularly high portion of migrants. Based on current projections, the absence of an annual inflow of new EU migrants into the hospitality industry each year would generate a significant recruitment gap, which would increase over time.

Despite it’s moniker the ‘barista visa’ scheme would fail from a business standpoint .The two-year limit alone is reason enough to anticipate this, since it forecloses incentives for training and retaining workers in an industry that is experiencing serious problems with skill shortages and turnover. According to People 1st, turnover in the hospitality industry is estimated at 20 per cent, while the KPMG survey of BHA members puts the estimate even higher, at 50.2 per cent. This costs the industry approximately £274 million annually. The Financial Times, reported that the ‘barista visa’ would also be open to other sectors that are heavily reliant on low-wage migrant labour, such as social care, agriculture, and construction. While the numbers of migrants for each industry will be restricted with an overall cap, there is no guarantee that there would be enough EU migrants who meet the proposed criteria and aim to work in hospitality. Last year, The Times reported that only 40,000 people applied on the existing Tier 5 youth mobility scheme for all industries. This is 20,000 less than the number of EU migrants who gained employment in the hospitality industry alone. Given the strict criteria of the ‘barista visa’ and the fact that the hospitality industry is expanding rapidly the number of EU migrants is likely to fall woefully short of the needs of employers. Combine this with low wages and the rising anti-migrant rhetoric of mainstream political parties and the situation looks dire indeed.

To attempt to lessen the impact of Brexit, BHA members have petitioned the government to retain EU workers and openness for tourism. They recognise how important migrant labour is for their businesses even if they have not necessarily recognised the rights and economic rights of migrants as a whole. The BHA’s focus on the business case for hospitality ignores the concerns of most of its labour force. Historically, they have opposed legislation designed to protect workers’ interests such as the minimum wage legislation in 1999 and tips legislation in 2009. They have also avoided addressing criticisms from trade unionists about issues in the industry. Last year, Unite regional officer Dave Turnbull offered a different explanation of why the industry cannot recruit and retain the type of workers it needs. He cited a fundamentally “flawed, low cost and exploitative business model” in an industry where “low pay, insecure working, exploitation and institutionalised bullying are rife”[1]. The ‘barista visa’ will only exacerbate these problems. It would further entrench divisions in the labour market and further undermine the collective rights of workers. The scheme denies migrants a social safety net and offers no chance to progress in a career or build a life in the U.K. long-term.

The ‘barista visa’ also fails from a worker’s perspective. Labour Force data shows EU nationals are already concentrated in low-paid and lower-level occupations, especially in the hospitality industry. As of 2016, less than 1% of EU nationals in the hospitality industry were employed in the ‘higher managerial and professional’ occupation grouping. The current state of UK labour law weaves issues of migrant rights into the employment relationship, leaving open the potential for employers to terminate their contract which could effectively leave them exposed to deportation. The ‘barista visa’ ultimately will keep EU migrants in a legally subordinate position to nationals, exacerbating the ‘migrant division of labour’[2] and further undermining all working conditions. The further precarisation of migrant labourers in the hospitality industry will at best allow business owners to continue exploitative practices and at worst, further divide workers.

[1] Unite, 2016. Unite in direct plea to London mayor to tackle exploitative work practices in London’s hotel industry. Press Release. http://www.unitetheunion.org/news/unite-in-direct-plea-to-london-mayor-to-tackle-exploitative-work-practices-in-londons-hotel-industry/

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.

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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’.

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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.