Essays in the EU debate #2: The case for Brexit – it’s all about power

By Roger Dunn

British trade unions can be forgiven for having clung so tenaciously to the idea that the European Union is a positive force, a source of valuable jobs and employment rights. The idea of ‘Social Europe’ and the raft of legislation in which it was embodied appeared at exactly the time that British trade unions were facing a brutal frontal assault from a government bent on their destruction and traditional manufacturing sectors were haemorrhaging jobs. In such a context, the Working Time Directive, TUPE, the part-time workers equal treatment directive and other legislative initiatives from the Commission seemed and to some extent were bulwarks against some of the worst excesses of unleashed British employers and unchecked Tory governments.

In recent years though, a series of highly detrimental judgments in the European Court of Justice, deep public spending cuts, rising and chronic unemployment in large areas of the Eurozone, the collapse of collective bargaining, the European Commission’s deregulation programme (REFIT – Regulatory Fitness and Performance) and the brutal treatment of the elected government of Greece by the ECB and Commission in particular have thrown the idea of Social Europe into deep crisis.

To understand the real content of Social Europe, we have to return to the context of its birth. Social Europe was never a project for embedding equality and workers’ rights within the European Union. Rather it was a policy solution pushed for by Social Democrats particularly in France and Germany to ensure that the creation of the single market in labour did not lead to politically problematic social dumping – more a set of minimum standards that normalise labour flexibility than a set of controls on capital’s action. The Directives on Agency Workers, on part-time workers equal treatment and on TUPE for example, have proved horribly weak in practice.  The ECJ judgments on Viking and Laval, followed by Ruffert and others have revealed that there is in fact no balance between labour and capital in the EU. Capital’s right to establish and undertake business wherever it likes trumps labour’s attempt to limit it using the rights to association embedded in the EU’s charter of fundamental rights.[1]

The deeper problem with Social Europe was that it was an attempt to use regulations to solve far bigger problems of economic and political power. The main direction of travel in policy-making within the EU was always toward the free movement of capital and labour and this is embedded in the Treaties that underpin the Union. The Single European Act in 1986 established this principle and it was reiterated in the Lisbon Treaty. The Maastricht Treaty in 1991 added to this the Stability and Growth Pact, a fundamentally neoliberal policy stricture that said that no government would be permitted to run a budget deficit of more than 3%, effectively outlawing any Keynesian policy interventions that might have this as a consequence. This was a preparation for the Single Currency which enshrined the ‘one-size fits all interest rate administered by the European Central Bank. Britain did not join the euro, but it did sign the Maastricht Treaty and the Stability and Growth Pact.

What has been the effect of this policy drive? The European Union’s policies and particularly the price of the euro have driven the massive concentration of industrial power among a handful of French and mostly German companies at the expense of industries in the Greece, Italy and other Southern European states as well as Britain. German imports now dominate these economies while unemployment in the Eurozone has soared to 1 in 8, a figure that leaps to 1 in 4 for youth unemployment. Public spending cuts and attacks on welfare and pensions systems for workers have been driven forward as key parts of successive waves of European integration. The 2008 crash has only accelerated this drive. Economies like Ireland, Greece and Portugal which were opened up to speculative real estate and asset investment bubbles have had vicious austerity enforced on them by the ECB and the Commission in return for bailouts aimed more at protecting the investment of US, British, German and French banks than the ailing economies of these countries. Collective bargaining is under pressure, not from ‘exogenous’ unstoppable global forces but from the deliberate policies of the EU such as the Stability and Growth Pact and the European Employment Strategy, both of which drive to create greater labour flexibility and mobility partly by creating pressure to break up centralised collective bargaining arrangements and generous social welfare systems at national level. One of the main targets of the austerity programmes enforced on Greece, Portugal and Ireland by the Troika has been the collective bargaining structures and practices in place.[2]

Since 2012, this has been accompanied by REFIT, akin to the British Government’s ‘Cutting Red Tape’ programme, which is ‘screening the whole stock of EU legislation’ to remove ‘burdens’ on corporations. Already, directives on musculoskeletal disorders and protections for workers against tobacco smoke have been blocked.  According to the ETUC, the Refit programme has an action plan to ‘simplify EU social laws’, including key directives that underpin workers’ employment rights in Europe, such as the directives on information and consultation, temporary agency work, data protection, posted workers, as well as the Working Time Directive.

How does the British labour movement orient itself in response to this? For some, it’s enough to point to the workers’ rights embedded in Social Europe: “David Cameron is launching another frontal attack on the trade unions and attacking employment rights –they still exist in Europe – we’re better off in”, the argument goes. The problem is, as seen above, Social Europe always had weak roots and it’s surrounded by far stronger forces pulling in the opposite direction. It’s not just David Cameron who poses a threat to those rights. The EU itself is undermining them. For others, this is all just another reason why we need to mobilise around the ideal of a real social Europe, a workers Europe. This is the kind of position being advocated by Caroline Lucas and some ultra-left groups for example. Unfortunately, this is a fine-sounding idea with very little material reality behind it. A quick comparison of the levers for the labour movement to influence policy shows this very clearly.

Within the context of each state of the EU, as in most developed capitalist states, it is generally the case that national labour movements have forged a political arm, often in the form of social democratic and communist parties. These parties have at times exerted some pressure on nationally articulated capital, sometimes forming governments that have at least partially challenged the dictatorship of capital, the right of big business to determine macro-economic policy and social objectives. The labour movement has no comparable levers of power at EU level. The EU is established by a series of great power Treaties. Law is shaped by the agreements made possible by the common and competing interests of big business dominated states. It is initiated by the European Commission in the form of Directives, formed by an unelected body that meets and deliberates in private. Law is then interpreted by the European Court of Justice, another unelected body that deliberates in private, in line with Treaties and Commission Directives. The European Parliament cannot initiate legislation, being restricted to sending it back for further consideration, whereupon they lose control of it. The slogan ‘democratise the EU’ might sound good tripping off the tongue but it conceals the fact that there are no levers for doing so. Nor are there any forces actually willing to push this case. To change the nature of the EU would require a more or less coordinated revolt by European labour movements and their political parties. No such political will exists among key parts of the necessary forces. In any event, the domination of pan-European Union politics by conservative and liberal forces is too often under estimated. Political representation in both the European Commission and European Parliament is overwhelmingly right wing. Only 8 of 28 European Commissioners could be described as ‘left of centre’ and the junior partner role of the Progressive Alliance of Socialists and Democrats (social democrats) in the governing majority belies the numerical domination of anti-worker, conservative MEP’s in the European Parliament.

By contrast, at national level there are more hopeful signs for trade unions. The Labour Party has now committed not just to repeal the Trade Union Bill but to restore collective bargaining, renationalise some utilities and to undertake a more aggressive and interventionist industrial strategy. It is at least conceivable that progressive change could be won at national level by left labour government and extra-parliamentary struggle in which unions played their part. What similar strategy could be pursued within the EU? What levers and what political forces exist to accomplish this at European level?

More damagingly for the supporters of the EU, it’s not simply the case that the Union is unlikely to change in a progressive direction. It actively impedes the British labour movement in articulating its own domestic radical agenda. For example, any attempt to develop a domestic industrial strategy which involved state investment and ownership would fall foul of the Competition Law. Any attempt to restore the rights of collective bargaining and embed national labour standards would cut across EU law on the primacy of the right of establishment of business. EU Directives and policy calls for competition and flexible labour standards within all public services and utilities.

The final argument put forward by those locked into the EU is that leaving it would cost jobs. The usual figure touted around is 3 million jobs that ‘depend’ on the EU. But these are in fact simply jobs connected to EU export markets. In fact the very strength of these markets would give EU states an incentive to negotiate trade agreements on any UK exit. But even more importantly, any attempt to seriously rebalance the British economy through an active industrial policy would be practically impossible within the EU’s law, law that the labour movement has no way of changing.

The British labour movement is under a renewed frontal assault. But at the same time, the potential has emerged for a renewed relationship with a radical social democratic politics at national level. If the British labour movement were to make a cold, hard analysis of the likelihood of progressive change emanating from the EU, dominated as it is by multinational capital, concentrated on states over which it has no power, compared with the likelihood of progressive change resulting from a nationally articulated push in Britain, there can be only one answer.

[1] The pressures on collective bargaining in the EU are reported in a recent Eurofound report here and analysed in various writings by John Hendy and Keith Ewing. This essay by John Hendy gives an excellent overview of the employment law situation in the EU.

[2] The  inter-capitalist rivalries that dominate economic policy-making and the preponderance of German industrial interests are well explained from different perspectives by John Grahl  and this pamphlet by John Foster.

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