A report by the UK’s principal employer organisation the Confederation of British Industry said the UK should remain a member of the EU. However, it said reforms were urgently needed including in the area of social and employment regulation. The report, in November 2013, came in response to UK Prime Minister David Cameron’s commitment that a future Conservative government would renegotiate the UK’s relationship with the EU and hold a referendum on the outcome.
Background
In early 2013, UK Prime Minister David Cameron committed a future Conservative government to the renegotiation of the UK’s relationship with the EU (UK1302019I). He also promised a referendum on the outcome by the end of 2017 ‘with a very simple in or out choice: to stay in the EU on these new terms or to come out altogether’.
The UK Government is currently conducting a Review of the balance of competences between the EU and national governments. In particular, the Conservative Party is thought likely to seek the ‘repatriation’ of current EU competences to regulate social and employment issues.
At its annual conference in November 2013, the Confederation of British Industry (CBI) published a major report (4.4 MB PDF) on the case for and against UK membership of the European Union. The report concluded that it is overwhelmingly in the UK’s national interest to stay in the EU, but that reform of the EU is urgently needed, including in the area of social and employment regulation.
Business case for membership
As expected, the 180-page CBI report reaffirms the employer organisation’s traditionally pro-EU membership stance. According to the report, 80% of CBI member companies – including 77% of small and medium sized enterprise s – said that they would vote for the UK to remain a member of the EU if a referendum were held tomorrow. Reviewing the other available options, the report concludes that remaining a member of the EU is ‘better than any realistic alternative as a means to achieve British growth ambitions’.
CBI argues that membership of the EU’s single market remains ‘fundamental’ to the UK’s economic future, bringing ‘considerable benefits to the UK in terms of supporting jobs and growth’. According to the report, access to European markets for goods and services has been the ‘biggest positive’ for the UK economy, and EU membership has ‘given UK businesses access to the finance they need to grow’.
The report also notes that 63% of CBI members said labour mobility within the EU has a positive impact on their organisations, but that ‘pressures on local services and wider public perceptions threaten to reduce the legitimacy of [this] vital element of EU membership for business’.
Criticism of regulation
However, the CBI report reiterates employer criticisms of key regulatory responsibilities of the EU, notably in the area of employment law.
The CBI acknowledges that common rules are essential to the Single Market, but argues that the impact of ‘poorly thought out and costly EU legislation’ is a ‘major issue’ for business. It says 52% of businesses believe that if the UK were to leave the EU, the overall burden of regulation on their businesses would fall. Labour market regulation is identified as a problem area, with ‘particular frustrations’ around the Temporary Agency Work Directive and the Working Time Directive.
Proposed reforms
The CBI report says that the EU ‘has to change’ to become more ‘outward looking, open and competitive’. It identifies a wide range of reforms that CBI regards as essential. These include a ‘change of culture’ on the part of all EU institutions to reduce the burden of EU regulation, especially for SMEs. The CBI says that the EU must improve the process for assessing new regulations, ensuring they ‘adhere to the principles of proportionality and subsidiarity’.
The CBI report calls for a moratorium on EU legislation where there is a case for decisions to be made at national level, such as social and employment law. On specific employment law measures, the report seeks to:
- make the opt-out provisions in the Working Time Directive permanent;
- establish proportionate rules for SMEs under the Temporary Agency Work Directive.
Government approach
CBI believes the reform agenda identified by its report has support from a number of member states across Europe. In an implicit warning for the UK government, the report argues that ‘the right approach is to champion reform for the whole of the EU’, not a ‘special deal for the UK’.
The report continues:
It is important that the limits of the [European] Commission’s responsibilities are clearly defined, but British business sees the principle of subsidiarity as the right mechanism to achieve this, rather than unpicking the existing balance of competences. An unrealistic attempt to repatriate powers rather than reform the whole EU could lead to the exit door by default.
Mark Hall, IRRU, Warwick Business School