2003 - Temporary workers
British employers' organisations
were celebrating last month when the European
Union failed to reach agreement over the drafting
of the Agency Workers' Directive. The directive,
which appeared to have secured the support of
most European partners, was attempting to improve
the rights of temporary workers.
Industry bodies in the UK, however,
had objected to the proposals, fearing that they
would harm the business of existing temporary
agencies and would restrict the opportunities
for companies to build labour flexibility into
Anna Diamantopoulou, the EU's
employment commissioner, had been anxious to push
the measures through before the EU presidency
was transferred from Greece to Italy. But the
UK, backed by Germany, Ireland and Denmark, succeeded
in delaying the drafting. Now the impetus has
been lost. With Italy showing no desire to revive
the measures, it is difficult to see how the directive
could be resuscitated in the short term.
Some breathing space was probably
necessary but it would be a pity if all the momentum
towards a more equitable arrangement for labour
across Europe were lost. The focus on labour flexibility
has been drawing European states more closely
together in the search for common employment policies.
Italy, Spain, Portugal and Germany have been abandoning
many of their restrictive labour laws.
The degree to which some European
countries have moved towards a more liberal employment
regime is apparent in Italy. On the shelf next
to the desk of Maurizio Sacconic, undersecretary
at Italy's labour ministry, is a photograph of
the late Marco Biagi, the labour ministry adviser
who was assassinated in March 2002 because of
his desire to liberalise the Italian employment
It seems unimaginable, from the
perspective of anyone in the UK or the US, that
a man should have been killed simply because he
wanted to make it easier for people to find work.
He was not the first to die in the cause of labour
liberalisation but it is to be hoped he may be
the last. The hard left that once bred such extremism
appears to be losing ground. As Mr Sacconic put
it, "Italy is the last Eastern European country.
It's a transition economy. The only eastern European
country joining the monetary union."
The remark was designed to illustrate
the political and economic contrasts that characterise
the Italian economy. The same contrasts are evident
in the labour market. Italy has some of the strongest
Europe but it is also a country
with more than 4m "micro-businesses",
where a large proportion of people in the employed
population are either running a small company
or working for one.
The lack of support for a tightening
of labour laws in a recent referendum has given
the Italian government the confidence to pursue
phased relaxation of legislation, now being debated
in its parliament. As an experiment, the government
is proposing to ease restrictions under Article
18 of the labour law for new employees of larger
companies. Article 18 is the part of the law that
protects people from being dismissed in companies
with more than 15 employees. The job security
of existing employees will not be affected by
the move (at the insistence of the trade unions
before they agreed to the measures).
Economists are divided on how
it may affect the business sector. But the idea
that it will trigger a mass of mergers and business
expansion seems fanciful. On the contrary, it
could be argued that the vibrant network of interrelated
businesses in the Terza Italia - the band of industry
across middle Italy - is closer to the model that
the rest of the post-industrial world will need
to assume in future to provide greater customisation
of products and services.
I must own to some wishful thinking
here because I love the character of Italian towns
and cities to about the same degree that I hate
the homogeneity of so many high streets in Britain
and the US with their Identikit shops and restaurants.
Another Italian issue that in
time will be shared by its European partners is
that of demographics. Italy has the lowest birth
rate in Europe and in the north of the country
there is full employment, so the use of migrant
workers is widespread. The Italian government
has been pursuing bilateral agreements with countries
such as Tunisia and Albania to allow industry
sectors and private operators to provide skills
and language training in the source countries.
The idea is to ensure regulated flows of labour.
In the next few years there will
be a need for a similar movement of regulated
labour across the rest of Europe, including the
UK. The challenge for the EU will be to ensure
that it engineers the skills it needs to sustain
a strong and competitive mixed economy. This is
not just about providing 20m more jobs - the goal
of the Lisbon summit - but of matching skills,
people and work in a way that will ensure stability
and continued competitiveness.
The UK has shown what can be
achieved with employment liberalisation. Protectionism
among many of its European partners had gone too
far. But the protectionist approach was set against
a history of worker exploitation and the constant
search among employers for cheap labour.
These days you would have thought
the argument for promoting a strong, skilled,
fairly rewarded and sustainable labour force had
been won. But the resistance to the Agency Workers'
Directive led by the Confederation of British
Industry and supported too readily by the UK government
did little to confirm this. As Brendan Barber,
general secretary of the Trades Union Congress,
observed in a letter to the FT, the CBI's own
research revealed that three-quarters of the employers
it surveyed already gave temporary agency workers
at least as good conditions as permanent staff.
So why the opposition to measures that would ensure
greater fairness for all employees?
There is an argument that "if
it ain't broke, don't fix it". There is also
an argument that more regulations would mean more
red tape. But employers' organisations mounted
the same resistance to a minimum wage in the UK
and their arguments proved unfounded. Raising
the bar gets rid of the cowboys and promotes the
kind of work, temporary or otherwise, that people
and business need.
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