Voici la deuxième partie de l’entretien réalisé en novembre dernier avec Alan C Neal – spécialiste anglais de droit comparé européen et professeur à l’Université de Warwick – portant sur les évolutions du droit du travail britannique, concernant la notion même de « salarié », les responsabilités de l’ « employeur », le zero hour contract et l’évolution des frontières de l’entreprise.
If we look at the future, there were other reforms in the UK, like the zero hour contract or these employee shareholders. Do you think there will be also new provisions? And how is, in your opinion, labor law going to cope with the new boundaries between employers and employees, with the developments of new forms of employment? Who is a worker, an employee?
Let’s take a couple of examples. The background is that, like many other countries, we have a notion of who the protected is, and whom does labor law not protect. We don’t tend to have formal division into civil law, commercial law, labor law, like many countries, but we use similar concepts. Most of the academic debate is about the definition of employee status, because the most protected people are « employees ». There is a less protected group that are called « workers », and then there are people who perform work who don’t satisfy either of those definitions, and they are out on their own.
The definition of the « worker » is the widest coverage where there are protective measures, and usually we have a situation where employment rights which follow from European Union law are granted to « workers ». So they’re not limited to the most privileged groups: the « employees ». And that’s because the effective implementation of community law requires something wider than that privileged group. So, generally speaking, the principle is we will give European Union derived rights to workers. A « worker » is somebody who either works under a contract of employment or provides services of a personal kind. The first definition, somebody who works under a contract of employment, is the definition of an employee. So that is a difficult one, because it goes back to the old common law, and that was a distinction between contracts « for services », which is the independent approach, and contracts « of service », which is the master-servant relationship, the subordination. We’ve never, in the formal judicial interpretations in the court, adopted notions of subordination, para-subordination, the sort of things that our superior rights are about. Although a lot of academic writers use those, so there’s already a gap between the real world and the academic debate. That’s a problem. And in the UK context, the academic debate has let down workers and the practicing areas of labor law. We don’t have a well-developed intellectual analysis in this area, and what we have tends to be very derivative of European debates, and doesn’t always touch the day-to-day problems in UK law, which has become the normative dominant area of regulation, and areas of soft law, really are matters of inspiration, rather than having much else. So there’s a problem with these definitions.
But the « worker », who is wider than just the « employee », this could be somebody who performs personal services under a contract, enjoys these European rights, and that’s the general principle. The protections which an employee enjoys would be quite significant ones: unfair dismissal, and a whole range of related matters which only employees enjoy. Other areas, discrimination for example, have a much wider spectrum, because since 2000, they derive from European Union framework directives, 2043, 2078. Both of those require effective implementation under the general principles of European law. There have been some interesting developments: the employee shareholder. I think it’s been exaggerated way above its significance. There’s an interesting example from Jeremiah Miles Presles, which argues that this is a fundamental attack on the principles of protection of employment. I’m afraid that’s just completely misconceived. It’s a very limited range of employment protections, which the employee can chose to give up (unfair dismissal, and the right to redundancy payment, which is a statutory payment, where the reason for dismissal is for economic reasons: there is either no demand for the work done by the employee or no demand for it at the place where they perform). And there are safeguards, and Jeremiah Miles Presles has overlooked them. The safeguards require legal advice to be taken by the employee, and given by somebody who carries legal indemnity and insurance. That’s the same provision that applies to people who reach a settlement when they bring a claim to the employment tribunal, and take a settlement before they come before the judge. So it’s an equal well existing mechanism, quite effective, and there’s no reason to suggest that the employee is in a « take it or leave it » situation.
And what about an employee being a shareholder?
The benefits of the shareholdings are so low, and the risks associated with the type of companies who would give a share of the shares so high, that they’re not worth taking. Quite honestly, nobody in their right minds would become an employee shareholder. And certainly, under legal advice, it’s hard to see how a practicing lawyer, with that provision indemnity, could advise accordingly. Symbolically, it’s important: it shows a degree of creativity, a willingness to look at the possibility of removing statutory burdens from employers, and the mechanism adopted is what looks like quasi-voluntary agreement. The problem is the origins of that idea came from a report by the chairman of the conservative party at the beginning of the last parliament, in 2010-2011. That report was written by an ignorant man, with no real interest in labor law, whose interpretations were seriously flawed, and whose proposals came from a different planet. It doesn’t matter though, that you’ve got crazy ideas, because what you then have is a debate, and you can present less crazy ideas which might have a similarly disruptive component to them. And that’s the general allegation that’s made against that Anthony Beaver report. That’s the problem. But I don’t think personally the provision on employee shareholders can really be seen as anything more than highly marginal, and when you take into account the safeguards, which is where I differ from Jeremiah’s, then you can see you can count the takeout figures with one hand, so we’re not talking about a big impact. But, symbolically, it suggests somebody somewhere is thinking about how can we fragment the protected labor market, and is it possible to introduce things other than statutory normative protections, which apply to all employees.
If you go back to when unfair dismissal was introduced, in 1972 – it was in the Industrial Relations Act in 1971, came into force in February 1972 – and when redundancy payments were introduced in 1965, there were provisions in both of those statutes for employees to opt out of those protections. The way to do it was for the trade union to reach an agreement about opting out, or for the employer to have a system to opt out, which was approved by the minister, so the secretary of State had to approve that. There’s only one example of an opt-out, and that was when the electricians union came into a huge dispute with the Trade Union Congress (TUC), about compliance with the Industrial Relations Act, and they were expelled from the TUC, and there were one or two agreements that they entered into which use these opt-outs. But they were eventually repealed: it shows that the voluntarist tradition… because those were put into the act, on the assumption that the industrial relation system in the UK preferred voluntarism to legal normatism: it’s not been shown to be the case. If you’re not careful, you find that the academic debate still retains that assumption, and isn’t really very prepared to argue that the days of collective laissez-faire, as Kahn-Freund described it, have come to an end. If they ever existed, they’re certainly not there now. We’re in a regime where normative protections, through the legislator, are the way forward: you have to look at those. There’s very little protection elsewhere, through collectivized representation in trade unions, because of the numbers: some strategic areas, mainly in essential services and some part of the public services. But otherwise, it’s a very different picture from, for example, 1979. So that’s an interesting area, but one I think that’s exaggerated.
Is the « zero hour contract » something new?
An area that is not exaggerated is zero hour contracts. But zero hour contracts are nothing new : we’ve always had them. This is because we never had a close regulation for the contents of employment contract. Many countries have much more intervention as to what the employer is free to impose, or the employee is free to accept. So if an employer wants to say… Take a case, in the 1970’s, which involved Trusthouse Forte, the big hotel runner, and they ran banquets, and they would use non-core staff to service those events. So they would have a number of people that they could ring up and say: « We have a dinner tonight, will you come and serve wine at the table? » These people had no guarantee of any work to do, if they turned up they were paid for the hours they worked, and they all knew that if they said no, they would never be rung up again… The court held that they were not employees. They held that they had the choice to accept or not to accept the work. Notwithstanding the finding of fact that they were unlikely to be offered the work again. So they were held to have a choice, and because they had a choice, it was not a relationship of mutual obligation, which is the basic test for « are you an employee or not? » It comes from the Carmichael case, and is confirmed recently in a case called « auto claims », which applied to car valets workers. Interesting case, because the Supreme Court was prepared to go behind the wording of a written contract of employment, and say this was a sham, this did not reflect the true agreement between the parties. So it’s an interesting, quite revolutionary case, but it’s not been followed up in four years. So, is it so significant?
But « zero hours contracts » has been a problem, and the government had a consultation this year; they were concerned particularly about employers who employed workers on zero hours contracts, and prevented them from working for any other employer. As a result, they’ve introduced draft provisions they will legislate to make unlawful provisions in zero hours contracts of exclusivity. You could argue it’s a measure of increased protection, compared with the pragmatic operation of labor market. It’s very difficult to say in blanket terms, « this is a friendly government » or « an unfriendly government »: it’s a very mixed picture. When it suits, you may find higher protection. Another example: protection against various forms of discriminations, obviously because of the European Union provisions, the six classic protected characteristics are covered: sex, race, disability, age, sexual orientation and religion belief. Those are covered because of European law. We’ve always had other categories, for example gender reassignment, and one or two other areas. We’ve just expanded the area of protection to cover discrimination on the grounds of cast, so particularly for Indian groups: a big problem in the ethnic diversity of the British labor market, and there’s provision to apply the statute, but in fact, the judges have got there before the statute, and they held that the wording in the Equality Act already covers discrimination on the basis of cast. So it’s an extension of the scope of protection, and you can’t say there’s an attack on that. There may be other reasons; I’m not saying the government is really, really friendly to people in the workplace. It’s difficult to say they terribly, terribly anti, because that wouldn’t stand up to the evidence.
Other areas which are problematic: teleworking
Obviously, the UK, like any other advanced economy, especially with decent telecoms, has an interesting development in this area, although actually, most of our related matters are off-shored to India or similar places. So, if you want to know the time of your train, you’ll be speaking to somebody in India, rather than somebody elsewhere in the UK. But telework, in various forms, is quite widely held. We haven’t really seen any action, which you would say implemented the framework social dialogue agreement on teleworking. There are things that have been done, which you could argue are in line with the principles of that, but the UK government is not a great fan of adopting soft law techniques, and turning them into hard law protections. So, there’s an example there, which opens up another point I’ll make: areas such as the open method of coordination and other forms of soft law, whether it’s corporate cause of governance or the like, are not particularly effective in the British context because they’re not really susceptible to adjudication by legal means. And that’s what you need in the English system in order to get an effective remedy. There isn’t the social power of the trade union organization, or any other social groups, which make these more effective than the words on the paper. My personal view is that the academic debate, particularly generated at the European University Institute, looking at the areas of soft law regulation, is almost irrelevant to the British context. And British academic discourse that relies heavily on these forms of regulation as the way forward, in my view, are misguided. Because I don’t think the English way of doing things is particularly favorable to soft ideas coming into hard rights, and I think that therefore you need something more than that.
There may be some slight exception, there may be another argument, the other side of the coin, when you start to talk about variants of corporate social responsibility (CSR), which varies between rhetoric – a lot of companies have well-developed statements on CSR policies, some of which include their records on compliance with, amongst other things, labor law and employment rights. In there, I think you may find an exception to what I’ve said. So I’m not saying it’s a blanket problem, but I think in general terms, soft law in the UK is very hard to rely upon if you’re a worker seeking rights or protection. But you may get something via the CSR route, because, whether it’s the public face of the enterprise, whether it’s the damage to the brand… it’s not like other systems, like China, for example, where failure to pay the national minimum wage is seen as an issue, these are dealt with already, we don’t have a labor inspectorate, we have a form of investigation by local authorities, which is very similar, so minimum wage provisions are set nationally, and are enforced, and the criminal law, the penal law is used to enforce those. Health and safety at work is also sanctioned with criminal law, penal law sanctions.
So the British working law is definitively specific?
So, again, it’s not labor law in the sense that you would talk about protection against unfair dismissal or right to be paid your wages on time, these sorts of things. So I think we have a different environment there, and when people talk about the value or the effective soft law mechanisms in the UK, you’ve got to be a bit careful about that, I would be very skeptical. I may just be talking as a traditional judge, so I recognize there are other ways of looking at it, but I don’t see much evidence, and certainly, the collectivized voice through traditional trade unions, or anything in the place of trade unions, I don’t see happening. We don’t have very much in the form of institutionalized worker participation, we have nothing along the German or Swedish lines, we don’t have conseil d’entreprise in any sense, we don’t have boardroom representation… There are some rights to information, some rights to responses, of course we have the European company provisions, but how many European companies do we have? So it probably speaks for itself. So I think the picture is pretty pessimistic. Any other areas of non-standard forms of work : home-working, sometimes teleworking, sometimes not, we’ve had for three hundred, four hundred years, two thousand years? People working at home, it’s usually an area that provokes problems of health and safety. So it attracts the administrative penal area, rather than traditional labor law mechanisms. The question of young workers: they’re treated less favorably under the minimum wage provisions, there’s a lower rate for younger workers than for adults; access to the labor market through vocational training has, I would say, improved dramatically.
If you go back to 1989, remember the charter of fundamental social rights of workers, at the same time as the last stages of the Maastricht single market proposals, which were launched in the Single European Act of 1986. At that time, the notion of vocational training, which was part of the social action program of 1989, with the Commission published, gave rights to a very big fight with Mrs. Thatcher, because she was very determined to distinguish between vocational training (« formation professionnelle ») and the stated education system. And the UK has been very poor in its vocational training and in its technical training within the traditional education system. Unlike Germany, unlike the socialist countries, we’ve never had strong technical schools. So, that skills set is a real problem for the British economy now.
If you look at the debate on migration, it’s very interesting because, whereas the German economy is saying that it’s open to manpower, skilled and unskilled, because there are labor shortages, the UK is saying it’s open to skilled manpower, but not non-skilled manpower. We’ve got plenty of idiots in England, who are unskilled, there’s no problem about that! But we have a real problem in skills, and that’s why the EU 10 and the EU 12 have been very interesting, because amongst those are people who are the product of the technical schools and the vocational training arrangements in the former socialist countries, and that’s who we’re taking in to be plumbers, electricians, engineers… A very good laboratory for looking at that is the building of the infrastructure for the Olympics in 2012. You can see that the skills set on the construction sites were all brought in from central European countries, and that’s one reason why of course we were one of the few countries that were prepared to implement the free movement of workers provisions in the treaties, as soon as the Treaty of Accession was completed in 2004. We didn’t have the delay system that the majority of member states adopted. We did on the last two, but not on the EU 10, so that goes again to the labor market framework, and it’s a problem that goes back to poor vocational training in the UK. Now that’s an area that has improved. Again, there are lots of bad things about what the government has done in the last five years and what the present government says it’s going to do: pressure on people who receive social benefits, unemployed people, these sorts of things. A push, many would say, in the direction of American-style workfare.
In fact, a lot of it has been accompanied by a big improvement in apprenticeship, in vocational training, in re-skilling, many through public payments, some through enterprise payments, and it’s a difficult one to assess, so that’s another area. So young workers are actually having provision made. Otherwise, when new forms of work come through, by and large, you find them either already in existence, because the UK economy and labor market has been pretty advanced, like the French in privatization, and in the fragmentation of the workforce, so, they’re not new problems, it’s just that those who are outside find it even colder than it was before, in an era of austerity and reduced public benefits.
Now let’s try to get out of the UK debate, and let’s have a look at the globalization, the international labor law. What happens at the International Labor Organization (ILO) and the European labor law levels? What could you say about that?
Let’s start with the ILO, because there we have the basic focus for international labor standards. Remember though that international labor conventions have to be introduced in the UK, which has a dualist system, it’s not like the mono system of the Netherlands, so you would have to have domestic provisions to transpose those into effective rights that could be enforced in front of a British court. Obviously, as a member of the ILO, the UK has obligations on the eight core conventions, under the decent work provisions, the UK has ratified all eight core conventions, both of the equality ones, both of the charred labor ones, both of the forced labor ones, and, of course, 87 and 98: freedom of association, collective bargaining. The UK is also a member of the Council of Europe, a signatory to the 1950 European convention on human rights, so articles such as article 11 on freedom of association apply to the UK. Let’s take these two areas to start with.
A UK citizen is the director general of the ILO at the moment, so you may or may not regard that as a good thing, but you have an ILO in crisis. An ILO that’s been split by the employer’s side over the dispute as to whether 87 and 98 include the right to strike. And there’s an interesting subplot there, because if you look historically at how that happened, the employer’s side to adopt British legal methods to make challenges for the leader of the employer group at the time was an English lawyer. And what’s happened has been highly detrimental to the ILO, but also is a challenge to tripartism. And I think the tripartite consensus at the level of the ILO is really under threat, and it’s a big struggle. So you’re not going to get objections to anything in the UK, even if technically you can raise the complaint by reference to convention 87, at the present moment. And it’s interesting, in the 2015 general report of the committee of experts on the application of standards, there are comments and requests for information, but there’s nothing about the UK, which has been noted with concern… So that gives a clear way forward for probably ten years, before diplomatically, that’s raised. We’re one of the most recent cases where a complaint was made under the conventions on false labor, where prisoners serving judicial sentences in the prisons, were not given the facility of the national minimum wage, and this was held to be a situation amounting to false labor, because of the way in which certain provisions in prison are paid for. You can’t pay for your drugs or your contraceptives unless you have money, you earn the money by doing a job in the prison, but you’re not paid the national minimum wage. It was a very technical case, the British government was horrified: they didn’t expect to find themselves on the wrong end of a judgment of that quota, of an evaluation of that kind, and they’ve taken steps to change it. So, at that level, the British government often makes a big noise about how awful these things are, and quietly tries to put it right. They’re not very generous when they try and put it right, they tend to do the minimum necessary, but they do it.
And that’s the same with European Union law: if they have an adverse decision in the court of justice in Luxemburg, they don’t tend to resist it, they put very strong pressure on the civil service to get it changed so that things come into line. But they tend to do the minimum necessary. In the third area, because we can assume that the European Union has its own mechanisms for enforcement, and the UK is pretty good on that, they have their arguments when a measure is being negotiated, not when it’s adopted. When it’s adopted, there are very strict rules in the government to make sure it’s adopted, and it’s adopted in time. They’ve had problems in the past; they don’t want those problems in the future.
But when it comes to the Council of Europe, and the European Conventions on Human rights, it’s a very interesting area, highly controversial. In 1998, we passed a law called the Human Rights Act, and that requires anybody who’s acting in a public capacity, and that includes courts and judges, when they consider citizen’s rights, they must have regard to the provisions of the European Convention on Human Rights, and so far as they can, they must try to interpret the decision that they have to make in accordance with the provisions of the Convention and the jurisprudence of the European Court of Human Rights in Strasburg. That has given rise to a lot of decisions against the British government. So this is domestic British courts making decisions that the British government doesn’t like. The problem is, the government insists on blaming the judges, and the judges always reply by saying: « Well, you passed the law, if you don’t want us to do it, change the law! » So that’s the stand-off at the moment. But it’s a live issue, there’s a large part of the government, the conservative party, that would like to see the European Convention on Human Rights removed from direct effects into British law. There aren’t direct effects technically, but because of the Human Rights Act, and the obligation on judges to interpret in accordance, it has a very strong effect. Now that applies especially in areas like freedom of association for trade unions. There’ve been challenges, the UK has been on the wrong end of some decisions, cases about discrimination against workers to try to persuade them to leave their trade union membership have been held to be contrary to the article 11 provisions. And we saw cases from about 1990, that took us through that. The case of Wilson, and the case of Palmer were taken though on that basis. They both won their case against the UK, because of course you can’t go to Strasburg until you’ve exhausted the domestic remedies, so it’s a long time and an expensive process: you need the trade union on your side. The government changed the legislation; it looked as though it might have done some of the job, but not all of the job of getting it right. They changed the legislation again: there are some technical arguments that they still haven‘t gone far enough, but it’s marginal at this stage.
So you get very critical analysis from, for example, Keith Ewing and John Handy. John Handy tends to be the lead lawyer when these challenges are made; Keith Ewing is a very impressive academic at King’s College, London. Both are very closely allied to the European Trade Union Institute (ETUI) and to the trade union movement in the UK, but their analysis is a serious analysis, it’s not a propagandist analysis. But even they would recognize that we’re down to very small margins now. The rules about the procedures for taking lawful strike action are being challenged. There was a case involving the Unite union, in front of the Court of Human Rights in 2014, which they lost. That challenged the balloting provisions and the notifications provisions as making it effectively impossible to enjoy the protection of article 11. The Court of Human Rights unanimously held that was not the case, and several of the individual judges wrote their own opinions, making clear very strongly why they thought that argument was misconceived. They’re not going to succeed at that level. So, effectively, at the level of the ILO, there are no real sanctions, at the level of the European Union, where the UK doesn’t get it right, the sanctioning system of the court of justice results in the British government trying to get it right, but they don’t like to admit it’s because of those « nasty » Europeans. They prefer to show that they’ve had a review: « the business case says this is the efficient way forward, we think that there’s a majority of employers, an enterprise interest that is supportive of this, and therefore we will make these moves ». But they tend to do it on the minimalist basis. In relation to the Human Rights area, particularly collective labor rights, in that context, the Council of Europe is an interesting one, but most of the challenges have been exhausted, and we’ll see what happens with the tribunal fees challenge, but the ILO committee of experts has asked for information for next year, so that will be 2016. By the time they start to note with concern will be 2020-2025, and by that time it will be so normal that nobody will notice. So I don’t think we’re going to get much change on that. The only possible way forward is if the Supreme Court takes an appeal against the court of appeal decision to reject the unite application for judicial review. I expect the prospect of that is less than 50%, so, I wouldn’t put money on it.
Is there any debate going on about the notion of « employer »? What is a company today? Is it a network, a single company? Is there a kind of co-responsibility? Is anything going on about that issue?
The answer is yes, but not mainly amongst labor lawyers. The debate amongst labor lawyers has been at the other side of the question: « who is an employee? » When you think that colleagues, like Roger Blanpain, were asking this question, « who is the employer? » twenty-five years ago, in the context of European Union developments of worker participation, information, consultation, and was looking at areas like the Organization for Economic Co-operation and Development (OECD) guidelines for multinationals, to try to open this up, it’s remarkable that there hasn’t been very much developments in the labor law field. There has in the area of company law and taxation. Cases like Starbucks, Amazon.com, these sorts of organizations, when their domiciliality for taxation is not where they’re earning their profits. That’s become a really live issue, and that is very live in the UK: it’s because of a number of recent… you can’t call them scandals, because what the companies were doing was perfectly lawful, but we’ve moved into a sort of « is it morally right? » question for companies to act in a particular way. Which is one reason why I think the CSR debate has taken a move. I wrote an article, about ten years ago, asking the question whether the corporate responsibility was a form of corporate governance gain or was just a laissez-faire fig leaf, covering the embarrassment of the companies. And I very much expressed the view I thought it was words, not actions, I used the expression from Hamlet: « Words, words, words ». The evidence of real impact, it was voluntary, we hadn’t moved into the era of codes of governance, and I was very pessimistic.
I think if I had to write that article again, I would be more optimistic, but not by a huge percentage. Because there is some evidence of influence, especially out of financial crisis, where the free governance of enterprises has been restricted. It started with the financial controls, it spread into the boardrooms, but it’s still not very effective. The debate about that comes really out of the taxation debate. So, the driver is not « who is the employer? » for the purposes of protecting workers, it’s « who is the employer? » for the liability to make payments of taxation to the UK, rather than to Ireland or wherever it happens to be off-shored. And it’s also a debate that takes place in the area of health, safety and hygiene. So occupational health and safety is penally driven, and it’s important to identify who is the employer there. There’s a debate that comes out of that context, which is more general and is quite interesting, about whether you should regard the self-employed or the very small micro-employer as being in the same category as an employer in a more general, corporate sense. And remember we have a huge number of enterprises, which have very small numbers, often a husband and wife. These are areas of abuse which have been revealed more recently: we have a number of sanctions being enforced… Actually, last week, new guidelines for penal sanctions for the directors of companies who misbehave were clarified. It’s possible to disqualify directors from sitting on the board of any companies for up to fifteen years, if they’re misbehaving. Misbehavior is usually because they’ve failed to pay their taxes, or they’ve gone insolvent, and left all the debts.
Increasingly, but it’s still small numbers, it’s used for health and safety at work. In fact I did a report for the government with a colleague, about that remedy, and they made that a much sharper remedy as a result of the report. And it started to be used more generally. But I’m not aware of anywhere where it’s been used for a labor law sanction. I’ve made a proposal to the government, that it should be used, especially for non-payments of wages. Because I think when you get repeated non-payments of wages, you need a real sanction. And the sanction of disqualifying from being a director could have an effect in a lot of cases. The trouble is, if you have fees to get to court, and a long time to get a trial, effectively, you don’t have access to justice. So, even if you had that, the question is, could you exercise it, or would it be done by the revenue who have an interest in recovering tax on the unpaid wages, or could it be done by an inspector ate? There are issues there. They’re not part of the general debate. Academic lawyers in the labor law field don’t discuss these sorts of things, by and large. They ought to, but they don’t. It’s more about practitioners’ law, and judges’ law. So when I organized the meeting of the European association of labor court judges, they spent most of their time talking about these problems. If you go to an academic conference, nobody wants to know, they’re not interested, but actually, this is what’s undermining the protective layer. So, there is some discussion about that aspect of who is an employer.
Clearly, the operations of multinational enterprises raise serious questions about where the responsibility line goes. And of course, when you start to move into areas where you have realistic auditing of CSR arrangements, you start to open this up down the supply chain: there’s some prospect of that. Especially accountancy firms, consultants, are offering CSR auditing services. I have to say I’m not convinced about the effectiveness or the value of these, but a lot of companies see that it’s something that they should have, this sort of certificate in the front office saying they’ve done it. It’s better than nothing, but it’s not very much, I think it’s fair to say. In terms of the impact of the globalized economy, obviously the UK has always been very open and very vulnerable against international trade flows. You can see the problem with the financial sector, with the city of London being so powerful in that sector, and I think in that area, and a number of other areas, the recent visit of president Xi Jinping of China has been very significant. Because it’s not just that we’re selling all of our assets to the Chinese, it’s also that we want the Chinese to use the city of London as their financial gateway to international money markets, and it looks as though there’s been quite a successful move in that direction. So it looks as though London has one out against Frankfurt, for example. And if that’s the case, that’s very significant. It’s powerful because our service industry in that part of the gross domestic product (GDP) is very significant. And obviously we suffer quite low productivity when you look at GDP across the economy, this is very powerful if it moves in that direction. Export-led businesses are increasing, the engineering sector is cold, it went right down, and we lost most of it, although we’ve kept some of the specialist area, engineering in the car industry for example, Research and Development (R&D) in that area, specialist steel is still a major player in the world market, but it’s very small niche areas. We’ve lost, for example, to the Germen economy, when it comes to most of the engineering sector, when it’s heavy-weight, mass engineering. And you don’t recover that overnight.
The question of whether the control of multinationals is inside or outside the UK is actually quite interesting, because the European Union arrangements on the information requirements of trans-border companies have had a big impact on the UK. It’s very interesting, because if you remember, the directive was adopted at a time when the UK was opting out, at the end of the 1990’s. But when it came into force, the majority of companies who were caught by the provisions actually had their headquarters in the UK. And the reason they were caught as they had qualified operations in two or more member states other than the UK. So there was no escaping the net of regulations and obligations, and that didn’t seem to cause a problem. In fact the British government at that time started to realize that a lot of stuff was being off-shored to Ireland, as a result of the organizational benefits. And so they took steps. And again, quietly, quietly, the position was normalized. You’ve never seen the government saying; « Oh well, we decided to agree to all this », but it’s happened. And it’s quite interesting to see those mechanisms at work. So the nature of the enterprise, the conglomerate, the group, remains a live factor but the drivers are not labor law. The drivers are taxation, their responsibility for health-related, safety-related matters, off-shore drilling, pollution in the environment area, I mean, you know, where’s the headquarters of BP? The UK operation had suffered badly at the hands of the remedies available in American courts. And you get the same situation with GKN (Guest, Keen & Co.), with their problems in China, having their senior offices arrested and taken into prison. These are operations that have their roots in London.
So I think the global economy is not seen as a threat or a danger or anything to be afraid of, from a British perspective. It’s taken for granted, because it’s the way trade has always been done. As a mercantile trading nation, of course there are particular issues that come up from time to time, which need to be addressed, but the British government has been pretty good at that, their trade department developments have been quite well informed. There’s just one thing you might mention: we haven’t had a ministry of Labor for over twenty years. We abolished it. I always remember when Tiziano Treu was the Italian ministry of Labor, and Italians had the presidency of the EU, so he was the president of the Social Affairs Council, and we were together at an event, and I said: « Have you seen the news yesterday? They’ve abolished the ministry of Labor, and they’ve never replaced it », and he was saying: « That’s remarkable! How can you carry on like that? » Well, we’ve carried on for over twenty years. But it does create a problem: responsibility for labor law social policies, these sorts of things, is with the department of Business, Skills and Innovation. So you think about those three… they’re not very much on the social part of the balance between social and economy.
If you look historically, over the last twenty years, not just conservative governments, but the Labor governments as well, what you find is when a policy decision is made, that involves a decision to go in favor of the business case or the social protection case, generally speaking, the decision has been in favor of the business case, in the name of competition, competitiveness, and employment, so all the things that go back to the Delors White Paper in 1983. I’m not saying that it’s a deliberate choice to exclude social protection, but I think it’s been a natural tendency. You do that once or twice, it may not be so significant; you do it for ten years, fifteen years, you get a very big shift in the balance. And I think we’re reaching a tipping point: when the social interest is now so weak that we may see a reaction. And I think that’s partly down to not having a ministry of Labor. So the interest of the minister is in business, skills, innovation, it’s not about protecting workers. So I think there’s a problem there. And that, combined with the weakness of the trade unions, and provoked by the lack of access to justice, I think is a really serious time bomb, when the economy starts to perform less favorably. You can get away with it when the economy is booming, and whatever else one says, and for whatever reasons, good or bad, the British economy appears superficially to be booming: if you look at the increase in the active labor market, if you look at the unemployment figures down at 5.4% last month, that’s pretty impressive by general European standards. Look at the core, it’s not so attractive. Look at the skills set, look at the quality of the workforce, look at GDP or productivity: it’s not so good. GDP measured by output is OK, it’s 3% perhaps this year, roughly, but productivity is very, very low comparatively. But I think you can get away with these things when you’ve got low inflation, there is wage increases that shows it’s starting to be better off: you move to the Christmas period, you expect a retail bonanza, with spending in the shops. So all those things are to do with public opinion, and it’s difficult for, for example, trade unions to say: « These guys are bastards, we have a bad time » when people seeing that it’s not necessarily the same. But of course that varies by region, you wouldn’t have the same picture in the Northern England, as you have in the very affluent South East. So there is a problem there.
My feeling is that this combination, this steady, steady trend to make policy decisions at the macro level in favor of the business case, rather than the social protection balance, has reached a point where it’s close to a tipping point, and will be in crisis. I think when you combine that with the lack of access to justice, you start to find the seeds of problems. It could be quite interesting, you could go back to a period of unlawful striking, and it’s not unreasonable to think that could happen. Especially with the new directions of the Labor Party, what would be the sanctions? The essential services and the public sector are actually quite vulnerable to that sort of action, and the legal procedures are not likely to be a strong deterrent. I think the next couple of years could be very interesting. And if there’s a down turn into the economy, we could be seeing all of the old issues coming back, but being played out in a more vicious, and sort of « fight to the death » way.
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Alan C Neal, professeur à l’Université de Warwick, est un spécialiste anglais de droit comparé européen. Il a une grande expérience acquise dans de nombreux Comités auprès de la Commission européenne, dans des interventions d’expert indépendant auprès du Bureau International du Travail. Il a également au début des années 2000 travaillé à la création du droit du travail chinois dans le cadre de missions auprès du ministère du travail à Pékin.