EU referendum – economics, social policy and employment rights
In the last of a series of articles on the UK referendum on EU membership, Professor Dagmar Schiek looks at the impact the EU has had as regards free movement of people and the protection of workers' rights.
Both the EU referendum campaigns focus on economic gains to be made by remaining in or withdrawing from the European Union. We have heard them all. Withdrawing from the world’s largest regional market is a high risk strategy says the remain campaign, to which the leave camp answers that the UK can brave the storms of globalisation better alone, unfettered by EU regulatory baggage and protracted negotiations of trade deals with powers such as China.
EU free movement of goods and services has brought to the UK high quality food, and access to care services from other Member States, while allowing goods and services made in the UK into the world’s largest regional market, says the remain campaign, stressing the limits of service-related agreements at WTO level. The leave campaign counters that the UK will continue to trade into the EU, because the EU economies are dependent on trading with them. Essentially, both sides of the campaign appeal to our egotism, shouting at us: remain / leave will put more money into your pockets.
This dominant mantra of economic advantage nearly drowns social concerns – with one veritable exception: the social effects of people moving into the UK. The Leave Camp argues that EU free movement rights prevent the UK from stopping people to come here as long as it is a member, and highlights that this threatens jobs for British people, burdens the underdeveloped social housing sector as well as the stretched NHS. The remain camp responds that free movement sustains our NHS by supplying doctors and nurses whose degrees have been paid for by other governments, and submits that free movement is no one-way street: it also allows UK students to profit from 27 other university sectors, and UK unemployed to try their luck abroad. Again, both sides make an argument urging us to assess the personal gain we can make from EU mobility rights.
This essentially advantage-seeking argument nevertheless risks fuelling emotions and may contribute to increasing the fears of people moving into our country. Nevertheless, existing concerns should be taken seriously, in particular of those already in a precarious socio-economic position. Promoting EU social policy and employment rights is one way of achieving this. Again, both sides have contrasting views on this – though neither campaign focuses on social policy. Those promoting leave from a left perspective argue that the EU, in particular in its policies addressing the fall-out of a global economic crisis, follows neoliberal policies, that it does not have any credible social policy, and that the UK if leaving could develop better employment rights.
While there are isolated instances of UK employment law going beyond EU employment rights, e.g. in the field of annual leave, which is 1.5 weeks longer than required by the working time directive disregarding bank holidays, the remain campaign correctly points out that most EU employment directives have prompted progress in the UK: for example, even in the field of equal pay, where the UK was among the EU pioneers, ECJ case law has forced the UK to improve protection; and rights for temporary agency workers guaranteed by a directive of 2004 are still not quite implemented. All this, and more, is gathered in an impressive and accurate legal opinion by Michael Forde (QC), which leads the TUC to conclude that withdrawal from the EU would reduce the level of employment protection, in particular if conducted by a conservative government
But do these arguments really go to the heart of the matter? Is the question really whether the European Union at any point in time is bad or good for employment rights? The answer to this question obviously depends on the political majorities in the EU, which is democratically governed and thus changes their position in line with political majorities in its Member States and the European Parliament. I suggest that at a more structural level, there are three main lines of arguments that matter.
The first one relates to EU employment legislation and policy. It is open to doubt whether a national government is able to introduce effective employment rights which increase the price of labour in a globally interconnected world. The rationale behind EU employment legislation is to provide a level playing field at least within the EU: for example, temporary agency workers will all be granted equality in relation to the main working conditions (Dir 108/2004), preventing Member States from undercutting this minimum standard and thus attracting rogue employers, which will start a downward spiral.
Thus, EU membership requires states to introduce levels of protection, and economically strong Member States are not hindered from awarding higher level employment rights. Even in fields where the EU does not have legislative competences, the Member States can coordinate their policies, in order to avoid said downward spirals. The level of wages is a case in point: the EU does not have any competence there, but could, via the Open Method of Coordination, establish principles for levels of minimum wages, for example. These would not be binding, but allow a coordination and thus might even promote higher minimum wages.
The second relates to the character of EU law: all legislation (not the OMC) is legally binding, and can be enforced via the Court of Justice. While standing for citizens is not ideal, in practice the reference procedure has served as an opportunity, in the field of employment law, to introduce an additional layer of judicial campaigning. Here are just two examples: litigation before UK courts made the guarantee of annual leave more effective in outlawing rolled up holiday pay (Robinson Steele 2006), and litigation before Finnish courts ensured that Polish posted workers are entitled to more elements of pay than their employer saw fit (Case 396/13 – Elektrobudowa). Such litigation strategies are not always successful, and cases where workers’ rights are curbed are spurring the left case for leave support. However, should the UK withdraw from the EU, a whole array of opportunities for strategic litigation would be lost, which has often enforced workers’ rights.
The third reason relates to the structure of the Internal Market: it guarantees free movement of persons alongside equal treatment rights. This means that while foreign workers may create more competition, at least they cannot be legally required to work at lower wages or otherwise more detrimental working conditions. Also, they cannot be deprived from social advantages (such as tax credits), and cannot become instrumental to question the legitimacy of those payments and the accepted minimum standards they represent. Now, the “deal” Cameron achieved in February 2016, which will be enacted if “remain” prevails in the referendum, aims to change some of that for an interim period of maximally seven years. This is the period for which the other Member States (with the exception of Ireland and Sweden) had prevented countries which joined the EU from 2004 to profit from free movement of labour rights. The Court will of course have a stake in judging the legality of such legislation. Thus, free movement rights will also be protected against political compromise, if necessary.
This also means that no individual Member State can put a cap on incoming mobility of EU citizens. However, as always, nation states have ample scope to deal with any pressures, for example pressures on local services. In one of her last publications before she died after being attacked on the street, Labour MP Jo Cox recommended for the UK to establish a system of redistribution which ensures that a part of the taxes a worker pays are allocated to the region where they actually work. Because EU citizens in the UK overall contribute more than they receive in benefits, regions would have the funds available to address any problems in local services. This does not guarantee taxes are reinvested into the NHS as needed. However, as it is in the hands of each Member State to deal adequately with distribution of the taxes they receive, all these are problems made in Westminster, not in Brussels.
Overall, there are structural reasons that would make remain seem the more logical choice for anyone concerned about social policy. Most importantly, remaining in the EU, the UK is part of a powerful regional bloc in which countries together can promote high employment standards, which would not be achievable for each of them alone. This requires the EU to make protecting employment rights a priority. Addressing concerns relating to EU mobility requires action at national levels as well as EU levels, as elaborated above. All this demonstrates that the Referendum vote is also a vote about whether Britain is sufficiently open and mature to contribute to a Union greater than Britain, and to create a space where migration does not have to be a threat, because it is accompanied by equal treatment rights for all.