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Wednesday, November 05, 2008

A huge test of character for Brown

Set against the epoch-making events in America today, it may seem curiously mundane to focus our attention on EU employment regulation - specifically, the decision of a European Parliament Committee to push for the abolition of the British opt-out from the working time directive.

But this really is a huge, huge deal. It will be a major test of Gordon Brown's character, and his oft-repeated claim to be 'on the side' of British business and working families at a time of economic stress.

The Directive caps working time at 48 hours a week, but the British Government has made all sorts of horse-trading concessions over the past years to defend the UK’s partial exemption from these rules. The Government estimates that this arrangement is worth £9bn a year to the UK.

The opt-out remains to be voted on by all MEPs in December in the European Parliament plenary session, but this first vote in the Committee signals the way that vote is likely to go. After that happens, the issue will be passed on to the EU Council, where we will be in a majority voting situation. Sources familiar with the negotiations tell us that its difficult to see what leverage the UK will have in these negotiations. If Britain wants to keep the opt out, there will need to be some pretty serious horsetrading, either on this issue or on others.

If the MEPs get their way, it is absolutely clear that employees in Britain will suffer in a very direct way. As the Government has rightly pointed out, it is essential - particularly in a time of recession - that we maintain flexible labour markets.

If one earner in a family is made redundant, surely it is right that his or her partner can work extra hours in order to pay the bills? And when those bills are increasing, why shouldn't people try and work harder to help pay them? As for employers, already fighting against incredibly tough conditions, a cap on working time could literally be a matter of survival for their business.

The Government will be hugely embarrased by this: it had previously claimed that the right for UK workers to choose to work longer than 48 hours a week had been permanently secured as part of a ‘package’ deal on Agency Workers in June.

They shouldn't have given ground on either issue, particularly since both measures will have a massively disproportionate (and almost exclusive) impact on the UK. But having chosen to negotiate this package deal in the Council, making a huge concession in the process, the Government now finds itself being thrown back into negotiations - and probably having to make even more concessions. All because some MEPs didn't like the Council deal.

Why do MEPs think they have a right to do something like this? Who do these people claim to represent? It says a great deal about the European Parliament's distance from reality that only one in ten MEPs has any business experience whatsoever.

On a more fundamental level, the fact that the European Parliament is allowed to do something like this should make us think hard about the real value-added of the institution.

It should also make us reflect further on the failure of this Government's 'conciliatory'/ 'go with the flow' strategy towards EU negotiations.

As the jobless toll rises, Britain simply cannot afford to have tighter labour market controls forced upon it - a radically different approach is needed.

1 comment:

jon livesey said...

I don't think we should be particularly surprised by all this. Back in the Thirties, countries tried to create temporary advantages for themselves by various stunts, such as competitive devaluations.

Today, the same effect is seen in reverse. Instead of countries trying to get advantages for themselves, they are trying to impose productivity penalties on one another.

The tragic thing is that since the EU cannot impose working hours directives outside the EU, the net effect of this, if it passes, will first of all to impose a penalty on British productivity, but against a background of the entire EU imposing a productivity penalty in itself.

This won't be the end of the story. No trading bloc can impose a productivity penalty on itself without seeing more effective competition from the rest of the world, both in its own domestic markets and in third markets. So doubt the EU's next step will be to try to penalise imports with tariffs in the name of "protecting" the domestic producers that it is in the process of harming now.

If this process goes on for long enough, we simply get Smoot-Hawley back, but this time from the EU.