EU Developments: has social Europe disintegrated? London

About the Conference

by Roger Jeary

As we move ever closer to a UK wide referendum on whether to remain in the EU, the Institute brought together an experienced group of speakers to consider how, if at all, the EU protects workers’ rights and promotes prosperity and jobs. The conference posed the question: Is social Europe growing or withering?

Professor John Foster

The first speaker, John Foster, Professor at the University of West Scotland, addressed the economic causes and consequences of EU austerity. He began by setting out the causes of economic austerity within the EU and summed these up in three points: the assumptions of the 1986 Single European Act and subsequent treaties; the contradiction between these assumptions and the real world; and the resulting financial crisis and subsequent political use of the crisis. He described the consequences as increased inequality of power between labour and capital as well as between EU states, and the export of the crisis to the rest of the world.

John described the assumptions of the 1986 Act as ensuring competition would maximise growth and governments would not interfere with demand leading to an increase of five million jobs. Mrs Thatcher’s objective was to open up European financial services to the City of London, whereas Chancellor Kohl wanted to expand the German industrial market across Europe.

These assumptions were contradicted by the nature of competition between producers across Europe, the increase of bank credit and the nature of labour markets in Europe. The EU leaders ignored the first two and focussed on the reform of labour markets. He then described the impact of the financial crisis, which brought a neoliberal solution, which allowed no EU transfer funding, no monetary boost to demand, bank funding reversed and massive reform for labour markets through attacks on collective bargaining, labour contracts, pensions, benefits and welfare. He evidenced this attack by reference to the Portuguese reform programme of 2015 which saw the number of sectoral agreements fall from 172 in 2008 to 36 in 2012. The number of employees covered by collective agreements fell from about 1.9 million in 2008 to around 225,000 in 2014.

Professor Foster concluded that the inequalities that existed between the states before the crisis massively increased as a result of these actions. He described the consequences as having created the conditions needed to meet the original neoliberal economic assumptions. Labour mobility has greatly increased, and the effectiveness of collective bargaining greatly reduced. However he asserted that uneven development within the EU is even greater and financialisation even more marked. Many of the EU’s social protections have been eliminated. He posed the question of how far working people across Europe would be willing to carry the costs of continuing EU austerity into the 2020’s. (More details of this presentation can be seen in Prof Foster’s paper on this website).

Download Professor Foster’s slides here

Professor Keith Ewing

Professor Keith Ewing then took the floor and described the systematic attack on collective bargaining. He began by referring to 1935 and events in the USA concerning a man who slaughtered chickens. He was charged with violating a code because he was underpaying his workers and requiring them to work excessive hours, contrary to sectoral agreements. The courts found that such a code was unconstitutional because industry and unions cannot have power to set regulations to apply to everyone. The Congress then passed their National Labour Relations Act which permitted workers to join unions and bargain collectively but only for those workers who were members in their enterprise. This difference to sectoral agreements was the birth of what we now are increasingly seeing in the UK and across the EU.

In the UK, the Ministry of Labour from 1935 started to introduce sectoral agreements through joint industrial councils or trade boards designed to regulate terms and conditions across industries and trades. By 1946, a system existed whereby 86% of British workers were covered by collective bargaining. This system (opposite to the US enterprise based model) was adopted, by and large, across much of Europe whereby unions were, in effect, regulatory agencies. The density of collective bargaining coverage in Europe was far greater than the US system. From 1979, the British model started to decompose under Thatcher but the social regulations of the EU introduced rights for trade union members. However, there is no European initiative which gives the right to workers to bargain collectively.

Keith told the conference that there is a massive programme of deregulation and deconstruction of trade union rights in the EU, much of this is by stealth, he asserted. He evidenced this by reference to three powerful forces – legal constraints, economic levers and austerity measures.

In terms of legal controls, Keith referred to the Laval case which gave employers’ rights precedence over the rights of workers. Then from 2008 the game changed. The rules of economic governance required states to make an annual report of their economic progress and the EU bureaucrats would then make recommendations for actions that member states need to take. These have suggested that governments should move from sector-based to enterprise-based bargaining. It is these moves that are increasingly undermining collective bargaining.

He went on to outline how austerity has been a further factor in undermining collective bargaining. He cited Greece as the most extreme example of this where EU intervention has led to the destruction of the collective bargaining system. He added that external forces were also pushing in the same direction by way of free trade agreements such as TTIP. In all of these agreements there is a labour chapter which includes respect for workers rights. However, in TTIP the adherence to collective bargaining will give American companies the opportunity to export their system of collective bargaining to Europe.

He concluded that the American system of collective bargaining will become the norm across Europe leading to a diminution of workers rights and labour standards.

In answer to a question on how to reconcile the performance of EU countries with a strong regulatory system for bargaining and the EU desire to move away from this, Keith suggested that the systems in countries like Germany were perhaps not as robust as they once were, evidenced by the introduction of a national minimum wage and lesser coverage by collective agreements.

Read Professor Keith Ewing’s paper here

Jane Carolan

Jane Carolan of Unison presented her union’s position on the EU. She began by explaining how Unison was responding to the EU referendum. She told conference that Unison has no policy on membership of the EU, yet has strong criticisms of the EU. When Unison came into being there was a strong opposition to the Maastricht Agreement, which was felt to be undemocratic and supportive to the imposition of monetarism. As a public sector dominated union, Unison strongly believes in public spending which runs contrary to the EU Treaties on economic policy.

She went on to say that since 2003, attacks on public spending in the EU have proliferated with an emphasis on transfer of public services to the private sector. A result of the crash in 2008 has been the massive increase in unemployment and pensions, benefits and public spending slashed. Unison would argue that these are the logical consequences of EU economic policy. However, she recognises that policies developed by the union are not necessarily fully understood by the union’s membership. She felt that many of Unison’s members would continue to support the vision of an EU with a social democratic element. Unions have to respect members’ views and whilst a definitive view on the referendum may not be taken it would seek to draw attention to the issues and policies which need to be taken account of. She argued that trade unions should not be associated with either of the national campaigns for the “yes” or “no” vote as they fail to focus on the issues important to trade union members.

Jane concluded that Unison members need to consider what is the best for workers when they cast their vote.

John Hendy QC

The morning session concluded with Institute President and member of Old Square Chambers, John Hendy QC. John pointed to the dilemma faced by trade unionists. The first issue that he addressed was democracy. He asserted that the EU was not democratic, where the real power is exerted by the EU Commission. Not only is it internally undemocratic it exports that lack of democracy. Greece is the classic example of this but it is not confined to them. In Ireland, a discussion has arisen on collective bargaining and the EU has intervened to impose certain conditions that need to be included in the government’s agreement with the trade unions.

He went on to tell the conference of the rights that the EU has extended to workers across the EU. However, there is no right to extend collective bargaining or the right to strike in EU treaties. No more workers’ rights are going to flow out of the EU, John told the conference. So he asked should trade unions support continued membership on the back of past introduction of rights? Recent European Court of Justice decisions do nothing to suggest that the EU legal system is going to provide workers with collective bargaining rights protection and it is likely to continue to hold that the employer’s right to run a business trumps the right of workers to the benefits of collective bargaining.

He then turned to the trade agreements negotiated by the EU. Not just TTIP but agreements with Canada, Vietnam and trade in services agreements as well as others. These agreements give companies the right to sue governments but not vice versa. All of these agreements contain no enforcement mechanism for ILO conventions by workers against corporations or governments. They all contain a prohibition of states discriminating against corporations which could lead to a corporation suing a member state of the EU which offers a greater freedom to strike than others, on the grounds that this adversely affects their business.

John concluded that these facts may lead one to assume that a vote against EU membership is appropriate but he warned that outside of the EU the present government would seek to impose further restrictions on trade union activity and a further diminution of workers’ rights. He suggested that the only hope to avert such a situation would be a government led by Jeremy Corbyn.

In a question and answer session the point was raised that trade unions have perhaps failed to offer a “left” view alternative to the EU. It was recognised that a huge education programme was needed to equip workers with the knowledge to make an informed decision. John Hendy accepted that outside of the EU, Britain would still be subject to the global direction of a capitalist world.

Professor Michael Doherty

Professor Michael Doherty of the Maynooth University Department of Law talked about free movement and workers’ rights. He reminded the conference of the original commitment of the EU to promote improved working conditions which has been led by treaties which included the Charter of Fundamental Rights of the EU. He drew attention to the fact that only 2% of EU citizens exercised their right to free movement in 2004, and by 2016 this had only increased to 3%.

He went on to look at four issues affecting free movement and workers’ rights. The first of these related to equal treatment of workers when moving to another EU country. He emphasised that equal treatment has to be the lever which guides the economic policy of the EU. If equal treatment was not adhered to then a labour market would be disadvantaged which in turn would lead to social inequality. The second issue looked at the relationship between the internal market and free movement of labour. These, he argued, need to be complementary not in opposition, however the danger arose because internal market law is a matter for the EU while social and labour rights are “relegated” as an issue for member states.

Thirdly, the issue of posted workers introduced a second tier of workers who do not enjoy equal rights which effectively suspends rights in favour of employers’ freedom to provide services. The nature of the sectors where this occurs tends to be where work is of a more precarious nature. The final issue addressed was that of free movement and social assistance. Michael reminded conference that the intent of the EU was that workers should not lose out on social security by movement to other member states. This he said has been complicated by non-economically active citizens but argued that “welfare tourism” is not a massive problem. He expressed concern that non-economically active restrictions can spill over into areas of job seekers or those who were working but lose their jobs and that it would be counter to the spirit of and actual EU law.

Michael concluded by saying that the level of movement is still very small but is seen by some member states as a “flood”. Fear of decline in wages/living standards are common but political reaction may make the decline more likely.

Download Professor Michael Doherty’s slides here

Linda Kaucher

The final speaker of the day was Linda Kaucher of Stop TTIP UK. Linda started by outlining the corporate takeover that exists, illustrated by transnational corporate power, especially financial service corporations. She pointed to their objectives as wanting to undermine democracy, get rid of regulations that limit company profits and undermine worker power. She went on to assert that these powers are fixed permanently into International Treaties (Trade Agreements). The intent to influence global policy is exercised through the EU through Brussels’ lobbying mechanisms such as European Roundtable of Industrialists, BusinessEurope, Transatlantic Business Dialogue and European Services Forum. Within the EU commission, the Trade Commission is the key party to the negotiation of trade agreements.

Linda then turned to the ‘new generation’ of trade deals emanating from the EU. This include TTIP, CETA (EU/Canada), EU/Singapore FTA, Trade in Services Agreement and Transpacific Partnership involving 12 Pacific countries incl US). She focussed on TTIP, outlining its main aims as deregulation, ISDS-corporations ability to sue countries, global rules and access to public procurement of transnational corporations.

The labour implications of this deal will increase access to cheap labour, introduce a downward pressure on labour (US has ratified only 2 of 8 ILO conventions), expansion of EU to include cheaper labour countries and movement of service suppliers to fulfil service contracts. Linda asserted that TTIP would lead to a loss of labour income, job losses and a reduction of labour share (the share of total income accruing to workers).

The state of play of TTIP in the UK is that the government, and thus the media, is silent on the subject. Lack of opposition is dangerous and implementation can arise before ratification is completed. Linda concluded by restating that TTIP is part of a strategic global corporate plan which will seriously harm worker rights and protections.

Download Linda Kaucher’s slides here

The final Q and A session suggested that should a decision be taken to leave the EU the immediate effect would be drawn out over a lengthy period while extrication from treaties developed and decisions about future relationships worked out. Linda Kaucher responded that in such an event there needs to be an organised response to counter those who seek to move the UK in a direction determined by the global corporate community. Keith Ewing said that individuals will continue to enjoy the same rights until such time as the UK has negotiated itself out of the EU.

Speakers

Chair: Sonia McKay, Visiting Professor of the University of the West of England

John Foster, Academic.

Keith Ewing, King’s College London and IER.

Jane Carolan, UNISON.

John Hendy. QC, Old Square Chambers and IER.

Michael Doherty, Maynooth University Department of Law

Linda Kaucher, Stop TTIP UK.