UK: Government report outlines potential reforms for EU social policy role

A UK government report published in July 2014 reviews the balance of competences between the UK and EU governing formulation and implementation of social and employment policy. Trade unions support European-level intervention in this area while employers’ groups want to restrict the EU’s role. The report identifies a series of potential future reforms.

Background

On 22 July 2014 the UK government published a report examining the ‘balance of competences’ between the UK and EU in the area of social and employment policy. The report is part of a wider review of the UK’s relationship with the EU, which was launched by the coalition government in 2012 and is intended to feed into its agenda for EU reform.

To date, the government has published 25 separate reports covering a range of policy areas as part of the wider review. A final set of reports was due to be published by the end of 2014.

According to the Minister for Europe, David Lidington:

This review is the most extensive analysis of the impact of EU membership on the UK ever undertaken . . . These reports provide a timely contribution to the debate here and across Europe about the need for EU reform. Many themes emerging from the reports chime with the priorities that the UK and other Member States have identified for the [new] Commission, and underline the need for the EU to focus on those areas where it genuinely adds value alongside pursuing an ambitious reform agenda for the benefit of all.

Key points of the report

The review of employment and social policy was led by the Department for Business, Innovation and Skills, with contributions by the Department of Work and Pensions, Government Equalities Office (GEO) and Health and Safety Executive (HSE). The report draws on the views of employers’ groups, trade unions and other organisations and experts that responded to a call for evidence.

The report discusses EU competences to regulate the employment relationship, working conditions, health and safety at work, non-discrimination and equality, and social protection. It also deals with coordination between Member States on social and employment issues, including employment promotion, social protection and the labour market aspects of the European Semester process.

The report states that social and employment policy is ‘one of the most controversial areas of EU competence’. This reflects the long-running debate within the EU about ‘whether or not social policy is in itself an intrinsic element of the Single Market’ – and about whether the EU should be ‘fundamentally an economic project’ or have broader social and political responsibilities.

The report traces the ‘pattern of increasing [EU] competence in this area since the Treaty of Rome’ but states that ‘it was arguably the Treaty of Amsterdam which had the greatest impact in extending competence by incorporating the Social Chapter into the main body of the Treaty’. The report considers the frequency of EU directives on social and employment issues and shows that the flow of EU legislation, initially ‘relatively slow’, picked up through the late 1980s following the Single European Act and again during the early 2000s. However, it has since tailed off again, with a greater emphasis instead on the EU’s role of coordinating policy across Member States.

Summarising the responses to the government’s call for evidence, the report notes a ‘high degree of fragmentation’ in views about whether EU action in the area of social and employment policy was ‘beneficial or necessary’.

A 2012 YouGov poll found that, among the general public, 67% of respondents felt that employment rights should be decided by the UK government, compared with 26% who favoured some EU involvement in this area. Of those organisations and experts submitting evidence to the review, the Trades Union Congress (TUC), individual unions and the Scottish government supported EU intervention in this area. Unions argued that EU action has played a beneficial role in maintaining employment, protecting employee rights at work, and combating discrimination and social exclusion. The Confederation of British Industry (CBI) cited a poll of its members showing that 52% said they had benefited from the introduction of common standards, compared with only 15% who suggested the impact had been negative. However, the Institute of Directors (IoD) said that a majority of its members found EU intervention ‘unhelpful’, while the public sector employers' organisation, CEEP UK, argued that other single markets operate effectively without extensive harmonisation of employment standards.

The CBI and other employers’ groups argued that EU legislation was often too prescriptive and that the EU should focus on goals and outcomes, leaving Member States with greater discretion in how measures are implemented. The costs of complying with employment legislation were also a ‘significant concern’ for employers’ groups, though the report notes that ‘it is hard to quantify the exact costs for business of EU social policy and there are no agreed figures’. Two EU measures in particular were seen by employers as being especially burdensome for employers – the working time and temporary agency work directives. The role of the European Court of Justice (ECJ) was also the subject of criticism from many respondents for its expansive interpretation of EU directives in some of its judgments.

Potential future reforms

The report concluded by highlighting some of the suggestions for change in the relationship between the EU and the UK that were received as part of the social policy review. These included:

  • reducing the complexity and increasing the transparency of the EU legislative process;
  • the more consistent adoption of the principles of ‘better regulation’ by the European Commission;
  • improvements in the processes of social partner involvement to ensure representativeness and transparency;
  • institutional change to give the European Council a mechanism to respond to rulings of the ECJ that go beyond the intentions of the EU legislators;
  • ensuring that the UK is a constructive and engaged participant in EU negotiations.

Commentary

The report notes that it ‘does not predetermine or prejudge proposals that either coalition party may make in the future for changes to the EU or about the appropriate balance of competences’.

In January 2013, Prime Minister David Cameron committed the Conservative Party to the renegotiation of the UK’s relationship with the EU, to be followed by a referendum on continuing EU membership, if his party forms the government after the national elections in May 2015.

Long-standing criticisms of the EU’s legislative competences in the area of employment and social policy by employers’ groups and parties to the right of the political spectrum have recently been overshadowed by the escalating political controversy over the effects of immigration to the UK resulting from EU freedom of movement rules. However, it is likely that measures to limit the impact of EU employment legislation on the UK will remain a priority for an incoming Conservative government if the party is successful in the forthcoming national elections.

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