European elections: Continental drift

When Europe goes to the polls in early June to vote in a new Parliament, national governments will be keeping a keen eye on the results. But what are the implications for UK employment legislation and the HR profession?

The centre right in the European Parliament has helped withstand pressure for significant change to employment legislation over the past five years. What are the prospects of tougher regulation following the European elections in three weeks’ time?

The European Parliament excites little passion in the UK, with fewer than two out of five voters bothering to turn out in the 1999 and 2004 elections. HR professionals may well feel the next election, on 4 June, is of little concern either because it is several years since any ground-breaking employment legislation was passed.

Momentum

But the outcome will inevitably impact on the forthcoming UK general election (which must be held on or before 3 June 2010), providing a much clearer snapshot of political support than any opinion poll. For Bryan Finn, director of consultancy Business Economics, the European results will be “all part of the momentum away from Labour and towards both the Conservatives and the Liberal Democrats”.

Other experts argue that the influence of Tory MEPs will wane whatever the European results, thereby tilting the balance against UK business interests. At present, the 27 Conservative MEPs are members of the European People’s Party and European Democrats (EPP-ED), the biggest single group in the parliament. Because the EPP-ED’s federalist views are at odds with Tory policy, a break-away grouping is planned.

Implications

David Yeandle, head of employment policy at industry body EEF, is seriously concerned about the implications. “A significant number of Conservative MEPs have been very helpful on a number of issues we are concerned about,” he says. “If you are not inside one of the larger parties, you are pretty marginalised and not very influential.”

Although the EPP-ED is regarded as centre-right, Yeandle argues that non-UK members often have markedly different views to the Conservatives. “They vary from Conservatives right through to people who would be seen as New Labour in the UK context.”

His concern is shared by Liberal Democrat MEP Liz Lynne, vice-chair of the parliament’s employment and social affairs committee. “In the past 10 years I have had allies in the Conservative group working together on the Working Time Directive, the Agency Workers Directive and several other directives,” she says. “A lot of businesses have worked with me and also with the Conservatives. Once the Conservatives lose that influence, it is going to have a tremendous effect.”

Toughen up

Yeandle highlights the role of Philip Bushill-Matthews, a Tory MEP who was appointed rapporteur on the Works Council Directive, as an example of how this influence works. “There was an attempt by the European Commission and the socialists to toughen up the directive and make it less business-friendly,” says Yeandle. “Bushill-Matthews was able to influence the discussions and water down some of the more business-unfriendly parts.”

Bushill-Matthews denies a split from the EPP-ED will significantly affect such issues. “We will retain very positive working arrangements on employment and social affairs issues. It will be very much business as usual,” he says.

He claims a stronger socialist presence in the parliament is the main threat. “The Left see employment and social issues as a battleground and are using the current global financial crisis to say that capitalism has failed. More regulation is going to be their campaign message.”

Change

He warns that one likely area of change would be the loss of UK workers’ right to opt out of the 48-hour working week following a failure to reach agreement on the issue during the current parliament.

The Posted Workers Directive, which is intended to stop companies from using foreign employees to get around domestic labour laws and pay rates, is also likely to be contentious, he says. This follows the dispute earlier this year over foreign workers allegedly taking UK jobs at the Lindsey oil refinery in Lincolnshire. Although posted workers are guaranteed minimum statutory rights in the host country, this does not extend to locally agreed terms.

Claude Moraes, MEP for London and Labour’s spokesperson on employment and social affairs, asserts that it is “simplistic and naïve” to suggest his group automatically favours the interests of trade unions over those of business. “It’s as if the rights of temporary agency workers or the new Anti-discrimination Directive is just an issue for workers; it’s an issue for managers as well.” He adds that the UK Labour government has worked hard to benefit business through better regulation. “That’s something Labour MEPs are very conscious of.”

Improving

Moraes believes the focus over next five years will be on improving the way existing employment law is implemented rather than on any new directives. “The posting of workers’ directive is an example of where tightening up may be,” he says.

Owen Warnock, employment law partner at Eversheds, agrees, saying the main changes to employment legislation have mostly been passed. “The only thing that has happened since 2004 is agreement on the law over agency workers and some minor changes to the rules on works councils. I don’t think there’ll be much change in the next five years.”

But he predicts pay and conditions will remain contentious when a company sets up a satellite operation in another country. He uses building sites to illustrate this point. “If an eastern European country wins a contract in the West, the terms and conditions won’t interest the Swedes or French but are greatly important to Eastern Europeans.

Illegal

“There have been attempts by the unions to take industrial action to stop undercutting, but the European Court of Justice says this would be illegal because it interferes with the fundamental rights of establishment in the single market. The unions are quite likely to be agitating for a change in the law.”

He cites the dispute between British Airways and pilots’ union Balpa last year as an example of this pressure.

Robin Chater, secretary-general of the Federation of European Employers, also plays down the prospect of significant employment law changes. He says many employee-orientated measures originally won approval because the Council of Ministers, which can veto parliamentary legislation, tended to favour such measures. But, with the accession of Eastern European states, the traditional UK outlook usually prevails now.

Chater adds: “During a recession, politicians are far less willing to take any steps that might increase labour costs. If you look at the European Commission’s agenda, you can see its concern is about achieving good practice. There are few new proposals.”

Cohesiveness

Roberto Savini, an executive member of the European Association of People Management, believes the recession may actually serve to reduce tensions surrounding employment issues. “When you have a common enemy, everybody knows you must try to sort things out,” he says. “It is a difficult period but a crisis brings new ideas, which might encourage more cohesiveness.”

However, Business Economics’ Finn believes that in the longer term, Bushill-Matthews’ warning about tighter employment regulation resulting from the global financial meltdown is probably well founded. “Europeans will be much more emboldened to go their way, rather than the UK-US model, which many would blame for the financial collapse,” he says. Finn believes that would tilt the balance against the free-market agenda in favour of a much tougher regulatory framework.

Make-up of the European Parliament

All of the European Parliament’s 736 MEPs belong to a political group, apart from 25 who sit as independents. Groups vote as a united block where possible and, according to the London School of Economics and Political Science, the centre-left controls 38% of the parliament and the centre-right 40%.

The biggest group, with 288 seats, is the centre-right European People’s Party and European Democrats (EPP-ED), followed by the 217-strong Party of European Socialists.

The 100-strong Alliance of Liberals and Democrats for Europe is generally centre-left, but stood alongside the EPP-ED on the Working Time Directive.

The Independence/Democracy Group, which has 22 seats, is the most right-wing group and includes eight members from the UK Independence Party.

The far-left Confederation of the European United Left/Nordic Green Left has 41 MEPs and is a vociferous opponent of increased flexibility in the labour market. The Greens/European Free Alliance has 43 MEPs, who are regionalists and nationalists as well as environmentalists.

What will happen in June?

Professor Simon Hix from the London School of Economics and Political Science predicts: “The centre-left and the centre-right will be evenly balanced, with about 41% of the seats each.” His analysis is based on a statistical model of the performance of national parties in the parliament’s elections since 1979.

Claude Moraes, London Labour MEP, fears extremists could benefit from another low turnout. “If you encourage protest voting, you can give power for the first time to parties like the BNP.”

Derek Clark, UK Independence Party MEP for the East Midlands, predicts little change in the balance of the bigger parties but adds: “The Euro-sceptic return will be bigger.”

Philip Bushill-Matthews, West Midlands Tory MEP, says Labour will do badly in the UK because the government is unpopular. “The centre-right in Italy, Spain, Germany and Poland are all expecting to do well.”

Brian Finn, of Business Economics, expects the parties of incumbent national governments to fare badly. “It was on their watch that the financial meltdown happened,” he explains.

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