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Why Brexit will be bad for workers

From a workers’ perspective, there are at least three claims which seem to lie at the heart of the Brexit debate. These can be summarised as follows:

  1. That Brexit will restore ‘British jobs for British workers’ which have been taken by European Union (EU) workers through unlimited access to the British labour market.
  2. That Brexit will remove ‘red tape’ in labour law imposed by EU social policy Directives, which will cut costs for ‘British business’, enhancing British competitiveness and creating employment.
  3. That Brexit will lead to Britain ‘taking back control’ over its own terms of trade, reasserting sovereignty which will serve workers as citizens.

These are not particularly worthy objectives. Rather, they reveal forms of nationalistic xenophobia which are alarming. They are also claims that are patently flawed, none of which are straightforwardly achievable, even if Britons should want them to be so. I will deal with each in turn.

‘British jobs for British workers’

Analysis of the Brexit referendum results revealed that indicators of a ‘leave’ vote were low income and precarious working conditions. There was a strong anti-immigrant sentiment in rural areas (where there were no immigrants), but also in the most deprived areas of the United Kingdom where wages were low and unemployment was rife.

However, it is highly unlikely that the free movement of workers to and from the EU was responsible for the enclaves of poverty that exist in Britain. It is, after all, illegal under Article 45 of the Treaty on the Functioning of the European Union to discriminate against workers who hail from another Member State, meaning EU workers should not be hired on systematically lower wages than British workers. Moreover, by means of Article 8 of Regulation 492/2011, EU workers are entitled to form and join trade unions, engaging in collective bargaining and industrial action in the same ways as local workers. It is possible that an influx of workers from outside the EU could affect the supply of labour in the British labour market, such that wages were lowered across the board, but there is no evidence to this effect. Rather, evidence suggests that, on average, EU workers tend to earn slightly higher wages than British workers (by approximately £2,300 per annum) and are less likely to be reliant on social security.

The root of prejudice seems to stem from the operation of the EU ‘posted workers’ regime. This system enables EU service providers to temporarily ‘post’ workers from other Member States to perform services in Britain. The East Lindsey Oil Refinery dispute in 2009 revealed the ways in which workers sent from Italy and Portugal – housed in nearby barges and bussed into the plant – could undercut local wages. In fact, the wages that the posted workers received in that instance were never revealed, even when the local Advisory Conciliation and Arbitration Service (ACAS) became involved in trying to resolve the dispute. Concerned that their endorsement of industrial action would lead to legal liability (under the recent EU Court of Justice judgment in C-341/05 Laval), the unions on site (Unite and GMB) resisted involvement. Instead, far right protestors hijacked the widespread unofficial strikes that followed. Placards were seen reading ‘British jobs 4 British workers’. The problems posed by posting of workers throughout Europe has since been recognised through the adoption of the amending EU Directive 2018/957/EU, especially Article 1. It is ironic that Britain is leaving the EU just at a time when concerns regarding posting are being addressed.

Moreover, the issues around the posting of workers (and their lawful treatment) will not evaporate on our leaving the EU. The UK is currently envisaging ‘reciprocal mobility arrangements’ with the EU, and temporary movement in the context of the General Agreement on Trade in Services, as well as in other free trade agreements concluded with third countries. Questions on the access of service providers to contracts, the wages and terms they give their workers, and the impact on local jobs are likely to remain matters of concern. Moreover, while the EU might be a net importer of labour for the time being, this could change again with economic decline in the wake of Brexit, and so the ability to protect British workers abroad may become more important than it seems currently.

Boosting employment by cutting labour standards and thereby costs for British business

Boosting employment by cutting labour standards was an avowed ambition of the British 2010 Coalition Government, which launched a ‘red tape challenge’ but found itself unable to act on various suggestions. For example, it was not possible to engage in far-reaching working time reform, because those standards have been imposed by EU law. One anti-European pressure group, ‘Open Europe’, has estimated that EU Regulations cost British business £33 billion per year and working time rules £4.2 billion per year. However, more recently, the current Conservative government has sought to become ‘the party of the workers’. Sympathy has been voiced for the hardships experienced by working people who voted for Brexit and there is an undertaking to improve their lot.

This is not consistent with slashing labour standards, so the government has taken a measured approach. The UK has prepared for Brexit by adopting already the European Union (Withdrawal) Act 2018. Section 2(1) states that ‘EU-derived domestic legislation, as it has effect in domestic law immediately before exit day, continues to have effect in domestic law on and after exit day’. Section 3 makes the same provision for ‘direct EU legislation’. So, the UK will at least for the time being retain after Brexit substantive workers’ rights derived from EU law, regarding matters such as discrimination, health and safety, information and consultation and working time.

However, these entitlements will then be subject to repeal, depending on what is politically feasible for – and considered desirable by – the government of the time with an eye to being seen to balance protection at work with costs for British business. While there is no straightforward plan to simply cut standards to boost employment, there is a risk under Brexit that both workers’ rights and jobs may be lost. The EU Charter of Fundamental Rights will no longer have effect as domestic law (under section 5) to guide interpretation of EU-derived workers’ rights. While past judgments of the EU Court of Justice will remain pertinent after withdrawal (under section 6), no future judgment will be, nor will there be scope for references to be made to the Court. Further, there is scope for amendment of EU-derived law by ‘subordinate legislation’, with the enabling of Ministerial powers, especially under section 8. These non-democratic Henry VIII powers have been subject to considerable criticism, but were nevertheless retained in the final withdrawal legislation. This does not bode well for the capacity of British people (and British workers) to ‘take back control’, but on the contrary, of autocratic government.

‘Taking back control’: reasserting sovereignty?

The slogan ‘take back control’ was part of Boris Johnson’s campaign for Brexit. Having resigned as foreign secretary in Theresa May’s cabinet, he is now a contender for the Conservative party leadership and still using the same rhetoric. He is referring to the trade opportunities that Britain will have on the world stage due to its new-found sovereignty. This is however a naïve vision, for the UK will remain subject to international trade obligations as a member of the World Trade Organisation (WTO).

There are arguably at least three different ways in which free trade agreements (FTAs) potentially feature in British post-Brexit plans. The first is a future FTA with the EU, which is currently envisaged by the Conservative government to be a ‘free trade area’ akin to the Comprehensive Economic Trade Agreement (CETA) concluded between the EU and Canada. Secondly, the UK is aiming to continue participation in agreements concluded by the EU with third countries, uncertainties around which have been noted by the House of Commons International Trade Committee. Third, there is the potential for the UK to conclude new agreements with third countries, such as China and the United States – the latter a prospect that President Trump has described as ‘great’ and ‘tremendous’. Regardless, the UK cannot start to negotiate agreement with any partner other than the EU before withdrawal. Moreover, WTO rules still apply.

Concerns are arising regarding tariff and services schedules under the General Agreement on Tariffs and Trade (the GATT) and the General Agreement on Trade in Services (GATS), which have to be modified on exit. Generally, the UK has to abide by the standard ‘Most Favoured Nation’ principle, national treatment requirements and prohibitions on quantitative restrictions. Further, even the enforcement of labour standards in the context of trade must comply with Article XX of the GATT and Article XIV of GATS, pursuing carefully defined aims and ensuring transparency and proportionality. FTAs must entail a ‘substantial liberalisation of all trade’ to meet the criteria for exemption under Articles XXIV of the GATT and Article V (and potentially Article Vbis) of GATS, with the approval of the Committee on Regional Trade Agreements, and even then may require some forms of compensation to affected parties. The UK’s desire to ‘cherry pick’ various sectors for market integration, such as financial services, will not be viable. If Britain is to comply with the peacetime rules for trade established since 1947, then there is a need to rethink simply ‘taking back control’.

Will workers benefit from Brexit?

It is often said that Britain is in ‘Bregret’ and would vote differently should there be a second ‘people’s vote’. However, the current government is firmly resisting that call and there is every chance that Britain will leave the EU on 29 March 2019. Here, I have considered three of the claims made that workers will benefit from Brexit. In relation to each, the following may be concluded:

  1. Britain is unlikely to protect borders against ‘posting’ or the temporary movement of natural persons which undercut wages and affect access to jobs. Such practices are likely to continue in any subsequent trade agreements and under GATS. The conditions ripe for xenophobia are more likely to be enhanced than if Britain stayed in the EU where measures are being taken to address the failures of the posting of workers regime.
  2. EU labour standards will be preserved under legislation, although no longer subject to human rights constraints. Workers’ rights are vulnerable to amendment and repeal. However, it already seems clear that jobs likely to be lost post-Brexit are unlikely to be saved by slashing so-called ‘red tape’.
  3. The UK will remain bound by WTO rules, so there will be disputes as to tariff and services schedules, and FTAs concluded will have to substantially liberalise all trade. Any protection of labour standards has to comply with ‘General Exceptions’ clauses in GATT and GATS. The UK also has to achieve the necessary agreements with other countries. Britain will not be able to simply ‘take back control’ for the benefit of British workers.

The three claims for Brexit offered from a workers’ perspective have been revealed as deeply misguided. If Brexit brings any benefits, these seem unlikely to be for workers.

 

Tonia Novitz is Professor of Labour Law at the University of Bristol, UK.

Image Credit: Alan Keith Beastall / Alamy Stock Photo

The author would like to thank the organisers and participants at the Congressi Internacional on ‘Law Inegracion Social Euopea’ held at the Universidad Publica de Navarra, Pamplona on 4-5 October 2018 where a version of this article was first presented. The views expressed remain the author’s own.