From the TUC

Miliband’s pledge to end Swedish derogation welcome

05 Jan 2014, by in Labour market

Although some have chosen to comment on the Sunday Independent headline, or its commentary on his article, or even an imaginary implication that he blames migrants for being underpaid and exploited rather than the employers who determine their wage rates, employer organisations at least are clear about the key message in Ed Miliband’s article this morning. It’s about clamping down on exploitation, and the undercutting of living standards that such exploitation produces. About ending Britain’s real dependency problem – “our country’s chronic dependency on low-skill, low-wage labour,” as he put it.

The Labour leader’s commitment to end the so-called ‘Swedish derogation’ in the regulations implementing the EU Temporary Agency Workers Directive is a welcome step forward in re-regulating the British labour market. That re-regulation, together with expanding the scope of collective bargaining, is a key element of tackling Britain’s living standards crisis. And it’s a necessary element of an open labour market: just as the relatively new minimum wage helped ensure that the last wave of EU migration didn’t lead to the ‘one euro an hour’ jobs that plagued construction sites in Germany, ending the Swedish derogation will help shore up wages at the most vulnerable end of today’s labour market.

Both the CBI and the Recruitment and Employment Confederation (REC) which represents labour agencies, were quite clear that the main point of the commitment is to tackle employer abuse of the Swedish derogation (not quite how they put it, strangely.) And it will, of course, protect agency workers whatever their nationality – despite the Sindy headline suggesting that the plan was solely to stop cheap foreign labour. The charge that the move would prevent agency workers becoming full-time employees is laughable: Unite showed in December at BMW that the best way to improve agency workers’ conditions is to convert them into full-time, permanent workers at the place where they are working.

The link with migration is not irrelevant, of course. Although ending the derogation will benefit migrants and existing workers alike (whether agency workers or the permanent employees they work alongside), the message is that a future Labour Government will be more concerned than the last one about regulating the labour market and protecting low paid workers, which is a key way to ensure that people are less concerned about the impact of free movement of workers. (NB, more concerned: the last Labour Government did deliver the National Minimum Wage, and Labour has committed to higher fines and more enforcement to tackle abuse of the minimum wage.) 

Employers criticising the commitment should also be careful what they wish for, not least because it is as much the way some employers have used the derogation as its existence that has caused such concern among unions (the TUC has lodged a complaint with the European Commission arguing that the UK version of the derogation is contrary to the Directive.) As well as ‘repatriating’ labour market regulation (which probably wouldn’t leave much in the way of protection for agency workers or the permanent employees they may be used to replace), the Conservatives are now pledging to choke off the free movement of labour that the EU offers employers. Good employers faced with the choice of a regulated but open labour market are likely to prefer that to one that is deregulated but sealed.