The Myth of Social Europe

Brian Denny writes:

European Central Bank president Mario Draghi declared to the Wall Street Journal a year ago that "the European social model has already gone." In truth the former Goldman Sachs banker who now controls the European single currency - free from all political and democratic constraints, in line with EU treaties - no longer felt the need to go along with the fantasy that such a "social model" even existed in the first place. 

The reality is that the "European social model," which claimed that European "social partners," trade unions and big business, were equal and had common interests - "all in it together" in the new parlance - was always an aspirational myth rather than rooted in reality. In fact there are many differing social models in Europe built up in nation states over decades and even centuries in order to manage industrial relations and disputes between employers and workers. 

If anything the EU's European Court of Justice (not to be confused with the non-EU European Court of Human Rights - well, it's more complicated than that...) has sought to undermine best practices employed in Scandinavian countries and hand more powers to business to carry out social dumping, a means of reducing labour costs either by employing migrant labour within a country on lower pay than provided for by national labour agreements or by exporting production to countries where labour costs are lower.

In both cases unions' power to protect workers' rights through collective bargaining is sidelined or attacked. Nevertheless the TUC doggedly continues to claim, without a mandate, that support for EU structures and treaties will bring more benefits to workers than disadvantages in the name of "social Europe."

With such intense support from some trade union leaderships, Mr Draghi is confident enough to kill off social Europe and announce that there will be "no escape" from tough austerity measures for workers in order to save the banks that created the single currency. Nowhere is the illusionary nature of social Europe so clearly laid bare than in the various EU directives emanating from Brussels that claim to defend workers.

For instance the Agency Workers Regulations (AWR) were once heralded by EU enthusiasts as proof of the good intentions of the unelected European commissioners. Yet, while they purport to protect agency workers, the overwhelming effect of the directive has been to normalise and institutionalise casualised labour. Even the Recruitment and Employment Confederation that represents employment agencies has found that the AWR have had little effect on those it represents.

Moreover those in the labour movement that hoped that the AWR would provide agency workers with a safety net have found that the so-called "Swedish derogation" is being used aggressively by agencies and users of agency work to keep down pay. The Swedish derogation is a mechanism lodged within the regulations which says that if the agency sets up a permanent employment contract with the agency worker, who is then hired out to a user-firm, there is no obligation to ensure that the agency worker receives basic pay and conditions comparable to a permanent worker on a similar job.

According to a survey carried out for the Department of Business, Innovation and Skills, 28 per cent of agencies have adopted this model. The full implications of the derogation are still unclear, but the advantages it offers to businesses seeking to pay temporary labour less are being promoted by specialist workshops. Researcher Christina Purcell has revealed that agency workers have been forced to sign employment contracts with agencies, waiving their right to protection under the AWR. Some agency workers are finding that they are now worse off, since their contract stipulates where they can be sent to work and they can potentially have little advance warning of assignments.

As with the 12-week requirement before the equality principle applies, the Swedish derogation was a compromise conceded to the Confederation of British Industry by the TUC in order to get British approval for the directive. "The EU directive, though supported by the TUC, is a reflection of the EU's employment model which promotes labour market 'flexibility' while providing minimum protections to soften the blow, 'flexicurity' being the buzzword with which this model is sold," Purcell notes. The directive also includes the obligation on member states to end "unjustified" or "disproportionate" restrictions on agency work - for example, the ban on agency workers in the public sector in France and Spain.

This extension of agency labour at the heart of the directive explains the reaction of Norwegian trade unions, which organised a general strike last year against its imposition. The Norwegian Confederation of Trade Unions is demanding that the government reject the directive and introduce laws to ensure that wages and working conditions for those who are hired are the same as for permanent employees.

Unions argue that the directive undermines Norwegian labour laws and introduces large-scale use of temporary and agency workers, forcing out permanent workers and weakening workers' rights and collective agreements. The directive also gives final authority over employment legislation to EU courts which have already struck down trade union collective bargaining rights in nearby Sweden and Finland in the Laval and Viking cases.

Backing the strike in Norway, International Transport Workers Federation general secretary David Cockcroft said that Norway's legislation on contract labour and temporary employment was some of the best there is. "The directive doesn't just risk taking a good law and making it mediocre - it could also strip the rights currently enjoyed by workers and open the floodgates to their replacement by precariously employed temporary and agency staff who will themselves get inferior employment protection," he says.

That, of course, is what the directive is designed to do in the first place.

Brian Denny contributed articles to the pamphlet Social Europe is a Con published by Democrat Publications www.caef.org.uk.