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Labour law wrangling

Mark Mardell | 10:20 UK time, Wednesday, 4 February 2009

The "British jobs for British workers" dispute seemed on the brink of a solution, although the deal on offer has been rejected. Workers' protest at Lindsey refinery, UK

What is interesting to me is not that the compromise plan proposes half the jobs going to British workers, but that the Italian company has accepted that all its workers on this job will get the standard terms and conditions as negotiated in the past by British unions. The company says they were anyway, but few of the protesters believe them.

European case law suggests that the company could be allowed to pay the Italians below the going rate. The European Court of Justice established that precedent in the Laval judgment.

The Latvian construction company, Laval, had been hired to build a school in Sweden. The EU rules say that companies must obey the minimum standards of the host country, such as maximum working hours and the minimum wage. Sweden has no minimum wage, and all such standards are set by agreements between unions and employers. Laval was expected to sign up to these conditions but refused. After a strike and many twists and turns the ECJ ruled the unions were in the wrong. Ever since then the European trade union movement has been asking for the rules to be rewritten, so that foreign companies are made to respect union agreements in host countries, or in that unlovely phrase "an end to social dumping".

As the Italian company is insisting its workers get the British union rate we have to ask why they are doing the job. Sometimes it's because native workers simply won't do the work, or in times of high employment aren't to be found. That's clearly not the case here. It could be because they are better, faster or cheaper. Most people automatically assume it is that it's about money. If the outlines of today's rejected deal become standard practice it could eradicate the main motive for shipping in workers from other parts of the EU.

But it will also increase the appetite for a new look at the existing laws. The Socialists in the European Parliament say: "We must maintain the internal market and the freedom of movement of capital and labour - the principles that have given unparalleled prosperity and are key to our countries' recovery from the financial downturn.

"The recent European Court judgments make it necessary that we have clarity on the current legal situation and within this context there is a need to review the Posted Workers' Directive, in order to avoid social dumping.

We urge the European Commission to be proactive in the midst of this economic downturn, particularly in relation to its effects on workers and their families."

Will the British government push for this, as it has hinted? I would be extremely surprised. Despite the noises from Downing Street diplomats haven't been asked to build any alliances or work up any proposals. And it will not escape the notice of other EU countries that it is always the British government that is in the forefront of the fight-back if anyone dares propose extending workers' rights.


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