Labour Law and Collective Bargaining – a new Social Contract

Roger Lyons, TUC President, addressing the International Conference 'Labour Law and Collective Bargaining - a new Social Contract', Lisbon 29, January 2004

Collective bargaining in UK has distinct characteristics. Up to the early 1980s, unions relied on their collective strength to establish widely observed agreements at industry and enterprise level, which could be defended, if necessary, with solidarity action. Contractors to the public sector were required to observe 'fair' wages and conditions which were comparable to those applying to the sector.

The late 80’s and early 90’s saw major attacks on trade union rights and an accompanying erosion of industry and company level bargaining. Twenty years ago, three in every four workers were covered by collective bargaining agreements. Now it is very much a minority that are. As industry and company level bargaining has declined, so the UK has seen an increase in the use of migrant labour. Only a minority of workers are now covered by a collective agreement.

At the same time there was an intensified globalisation of labour markets. We now have a growing use of migrant workers in UK and more experience of jobs being relocated to lower wage economies, as employers consider labour markets around the world when making decisions about restructuring. Paradoxically, the supposed global market in senior management seems to operate in the opposite fashion - with top salaries increasing rapidly, and the gap between top and lowest paid growing.

For the Trade Union movement, the EU Social Model is a counterbalance to the free market, reducing the risk of a race to the bottom between workers competing to keep their jobs. But it works only imperfectly, and is under considerable threat as employers and governments seek to undermine it in the name of flexibility.

European laws like the Posted Workers Directive are meant to protect against social dumping and give migrant workers the same rights as nationals of the country in which they are working. But in the UK those collective agreements that do exist are not legally enforceable and many employers are taking advantage of the situation to pay Portuguese workers as little as they can legally get away with.

Last year the Commission examined the application of the Directive, and found a number of problems. In Britain we have a particular difficulty - the Commission’s report said 'in the UK it was not deemed necessary to adopt a specific Act… since UK law applies to all employees regardless of their situation'. It might more accurately have said that all workers are equally vulnerable under the law.

Because they are not seen as being generally enforceable, collective agreements do not apply to posted workers, unless an employer chooses to observe their terms. And furthermore, many agency workers are not considered to be employees in British law, and so do not qualify for many protections - such as defence against unfair dismissal, for example.

The result of this is that unscrupulous employers in Britain are free to exploit economic disparities between countries to deny decent pay and conditions to workers from other countries, at the same time undermining the collective agreements that apply to British-based workers. They are also rewarded with lower employment rights for their workforce if they use agency labour. That is why Britain’s employers are so set against the Temporary Agency Workers Directive.

The other consequence can be a growth in xenophobia and racism as workers, feeling powerless to challenge those gaining the real benefit from these gaps in protection, may be tempted to turn against those who are equally victims of them, simply because they are 'foreign'.

One response must be to seek to organise workers wherever they are from. The TUC’s joint project with the CGT-P, one of Portugal’s two trade union confederations, has been doing this for Portuguese workers in Britain since 2001. The other must be to ensure that the Social Model is strong, and that we campaign for the regulation we need to defend workers from those who would set them against each other.

The Posted Workers Directive must be applied so that prevents social dumping, not rewards it, as is currently the case in Britain. This will strengthen the role of collective bargaining, and give some power back to the workforce. Unions must also continue to push for measures like the Temporary Agency Workers Directive, currently blocked by the Council of Ministers, if we are to build an inclusive society in Europe rather than a cut-throat rat race.