EU social partners’ first reactions to Brexit

Following the British referendum on 23 June, in which 51.9% of people voted to leave the European Union, social partners across most European countries have commented on the impact that the British exit will have on their countries or members. This topical update summarises their first reactions, in particular, in relation to working-life related issues.

In the run-up to the British referendum on membership of the European Union (EU), social partners across Europe – including, on the trade union side, the Irish Congress of Trade Unions (ICTU) , the Italian Confederation of Workers’ Trade Unions and the General Workers’ Union (UGT) in Spain and, on the employers’ side, the Spanish Confederation of Employer Organisations (CEOE) and the Confederation of Industry of the Czech Republic (SP ČR) – issued statements encouraging British people to vote Remain or expressing their hope for the UK to remain a member of the EU.

In the UK, social partners’ organisations had mostly been vocal in supporting the Remain side, with the Trades Union Congress (TUC) warning of a possible negative impact on workers’ rights in the case of a British exit (Brexit) from the EU, while the Confederation of British Industry (CBI) highlighted the positive impact of EU membership on the British economy. However, there were some exceptions among both unions and employer organisations, including the British Chambers of Commerce (BCC) and the National Union of Rail, Maritime and Transport Workers (RMT).

On 23 June 2016, a small majority (51.9%) of British people voted to leave the EU. Following the outcome, the CBI and TUC issued a joint statement, urging the government – and also companies, unions and other stakeholders – to take action towards securing jobs and investments and to reassure workers concerned about the potential negative implications of Brexit on their employment and social protections. The statement called on the government to allay the concerns of EU nationals living and working in the UK and of UK citizens living and working in the EU. It also urged the country to unite against racism and intolerance, in the wake of several episodes of racially motivated incidents.

Social partners in most Member States (exceptions include Croatia, Latvia, Lithuania and Slovakia) have reacted in some way to the outcome of the referendum. Those organisations that have commented have expressed regret at the decision. This was the case for trade unions and employer organisations alike. The issues related to working life most widely cited in the initial reactions from social partners were:

  • considerations about the impact of working conditions for workers in the UK;
  • implications for migrant workers and students working or living in, or from, the UK;
  • the future preservation of the single market with freedom of movement for workers;
  • the implications for trade and how different sectors would be affected;
  • deliberations about failures of the EU as a cause for the vote and the future direction the EU should take;
  • first actions to adapt to the new environment and to manage the change.

Reactions of EU-level institutions and social partners

European institutions and EU level social partners have expressed deep concern about the consequences of Brexit and their reactions are presented here.

  • Following a debate with the European Commission and the EU Council, the European Parliament moved swiftly to debate and approve a resolution (PDF) asking the UK government to activate Article 50 of the Treaty of the European Union (PDF), which would initiate the UK’s withdrawal from the EU, as rapidly as possible to allow the start of negotiations. It also asked the Council to cancel the UK’s presidency of the EU Council, scheduled for the second half of 2017.
  • MEPs expressed their desire for a ‘better and more democratic’ EU, focusing on providing citizens ‘what they expect’. They also called for a strengthening of the core of the EU, while at the same time providing for different levels of integration for Member States.
  • The European Commission published a fact sheet detailing its role in the withdrawal negotiation procedure. The Commission’s Directorate-General for Economic and Financial Affairs published a first assessment of the economic outlook for the euro area and the EU after the UK referendum. The document provides two scenarios – considering mild and severe effects – both foreseeing a slower GDP growth in the euro area (to 1.5%–1.6% in 2016 and 1.3%–1.5% in 2017) following the referendum, in comparison to expectations before the referendum (1.7%). The picture for the EU 27 Member States sees a slowing of GDP growth from an expected 1.9% in 2016 to 1.7%–1.8% and from 1.8% to 1.4%–1.7% in 2017. The Commission assessment sees the UK economy suffering more serious effects post-Brexit with a GDP decrease of between 1% and 2.75% by 2017. The Commission will issue an update of the economic forecast in November 2016.
  • The European Trade Union Confederation (ETUC) invited European trade union leaders and the TUC to discuss and coordinate a strategy, and to agree on a way forward. In its statement, ETUC stressed the value of solidarity and ‘the need to work together for a more democratic and different Europe’. Its main concern was the threat of the erosion of social and labour rights, in particular for migrant workers. It called for assurances that ‘workers doing the same job, in the same workplace, get the same pay’. It also asked for zero tolerance of racism and xenophobia, which have often resulted from misleading propaganda and populism.
  • Similar concerns were voiced by the EU level employer organisations. BUSINESSEUROPE, which represents employers in the private sector, called for Member States to issue a ‘strong signal reconfirming their commitment to the EU and its three main economic pillars: the single market, the common trade policy and the euro’. It also stressed the need for social partners and institutions to work together to create a better EU for its citizens. It stated that the pre-referendum debate had clearly signalled the need for ‘more Europe where needed and less where Europe does not add value’. It asked for more efforts towards a ‘coherent and outward-looking global strategy with a strong economic pillar’ and the implementation of ‘smart and less regulation and pro-competitiveness policies’ at both EU and country level, safeguarding the Schengen agreement and the ‘smart and efficient management of borders’.
  • CEEP, BUSINESSEUROPE’s public sector counterpart, stressed its full support of public services’ employers and providers, its commitment towards facilitating exchange and cooperation and its willingness to set up ‘a new type of relationship with the UK and CEEP UK’.
  • The European Association of Craft, Small and Medium-sized Enterprises (UEAPME) echoed the latter sentiment and assured its full support for small and medium-sized enterprises (SMEs) and cooperation with SME associations in the UK (PDF). UEAPME also called for a reduction of bureaucracy at both EU and national levels to facilitate the growth and success of SMEs and to create a ‘better business-friendly environment’.

Union concern for the potential deterioration of working conditions

Some trade unions across Europe expressed solidarity with British trade unions and workers, highlighting the likely impact of Brexit on different aspects of working conditions in the UK. Some examples of this support are given below.

Implications for migrant workers and students

The implications of Brexit for migrant workers or students were mentioned by a number of social partner organisations.

  • The Cyprus Workers’ Confederation (SEK) stated that the overriding concern of the EU should be the protection and guarantee of the working rights of British workers working in the EU and of EU citizens working in the UK.
  • In Spain, the Trade Union Confederation of Workers’ Commissions (CCOO) stressed that Brexit would have very negative consequences for British and non-British citizens working in the UK as European labour and social protection regulations will no longer apply and so there will be fewer guarantees for workers;
  • In Finland, Akava highlighted the freedom of movement of workers and students, including relevant social security clauses, as a very important precondition for accessing the internal market.
  • Representatives of the biggest Czech employer organisation, the Confederation of Industry of the Czech Republic (SP ČR), also expressed concerns about the restriction of free movement.
  • Bulgarian organisations were less worried. The leader of Bulgarian trade union, CL Podkrepa, Dimitar Manolov, stated that there will be no consequences for Bulgarians, working and studying in UK because of the cosmopolitan nature of the UK. 
  • In Poland, the biggest concern on the part of the social partners was the potential impact of Brexit on the 800,000 Polish people in the UK. A sizeable number of these – 300,000–400,000 – have been there for less than five years and hence have no permanent residency, which puts them in a more vulnerable position once the UK severs ties with the EU. According to OPZZ, Brexit is a consequence of ‘xenophobia and populism’ dominating the campaign, and the organisation has reasserted its readiness to stand for the rights of Polish workers in the UK in cooperation with British unions.

Implications for business and trade

Several employer organisations focused on the implications of Brexit for business and trade, as described below.

  • The president of the Federation of Austrian Industry (IV), Georg Kapsch, stated that he expects export losses for Austria as the UK is Austria’s eighth most important target market for domestic exports. In the long term, however, he thinks the damage to the Austrian economy will be marginal.
  • Cypriot employer organisations estimate that tourism from the UK and the export of agricultural goods to the UK will be affected in the medium term. They also raised the issue of the reaction of retired British people living in Cyprus if the exchange rate of sterling in relation to the euro continues to fall. As well as British people who live in Cyprus, a considerable number of British people own holiday homes there, meaning the UK holds a sizeable proportion of the real estate sector. Sales of real estate are expected to increase due to the low exchange rate of sterling.
  • The Czech Association of Small and Medium-Sized Enterprises and Crafts (AMSP ČR) carried out a survey before the referendum about the impact of Brexit on SMEs. While none of the companies surveyed perceived Brexit as an advantage, 58% declared that Brexit would have zero impact on their business activities, a third believed it would have only a partial negative effect, and 9% anticipated a substantial negative impact.
  • The executive chairman of the Bulgarian Industrial Association (BIA), Bojidar Danev, commented that Bulgaria would not face any direct effects as a result of the referendum result. He stated that Bulgarian trade turnover with the UK is relatively low – less than 2.5% of the country's total trade – and that Britain is the eighth trading partner in its export list. British investments in Bulgaria are symbolic, with the exception of those in real estate, which are often speculative in nature. In tourism, where Bulgaria has some standing with British holiday-makers, Mr Danev admitted that there could be losses.
  • All the Greek employer organisations –  the National Confederation of Hellenic Commerce (ESEE), Hellenic Federation of Enterprises (SEV), Hellenic Confederation of Professionals, Craftsmen and Merchants ( GSEVEE), Greek Tourism Confederation (SETE) – expressed their concerns about the outcome of the British referendum and the extent to which it will affect the EU's future as well as the Greek economy, especially tourism and the trade balance.

Deliberations about the future direction of the EU

Erich Foglar, president of ÖGB, expressed some sympathy for criticism of the EU, but said that overall EU membership has brought about several improvements in social policy.

Several other trade unions called for the EU to focus more on social issues, as outlined below.

  • Rudi Kaske of the Austrian Trade Union Federation (AK) stated that discussion of the European pillar on social rights should be a starting point for a fundamental change of course towards a more social Europe.
  • SEK in Cyprus stressed that the EU is at breaking point and needs to collectively take account of the British decision by leading the Union in a new direction. It stated that the current world situation needs the EU to be strong, more socially just and humane, and to implement high-level social policies. It supports a dynamic relaunch of the EU to promote and improve the living and working conditions of EU citizens. The overriding concern of the EU, according to SEK, should be the protection and the guarantee of the working rights of both British workers working in the EU Member States and the EU citizens working in the UK.
  • French trade unions also called for a more social Europe. The General Confederation of Labour (CGT), for example, stated that the Brexit vote was the result of EU economic policies that have promoted ‘austerity and social dumping’, which increase nationalism. CFDT asked for a reinforcement of solidarity and cooperation between EU Member States to help face the challenges of the 21st century. Jean-Claude Mailly, the general secretary of Force Ouvrière (FO), claimed that social issues have to return to the heart of the EU.
  • The German Confederation of Trade Unions (DGB) also called for a more social Europe as a reaction to Brexit. It proposed a fiscal stimulus package – a ‘European Marshall plan’ – instead of austerity measures, so as to promote growth and employment.
  • In a statement, the General Confederation of Italian Workers (CGIL) warned that Brexit was the result of the failure of the European social model, which had produced worsening working conditions and more inequalities. It warned that this failure could eventually lead to the end of the EU. It urged ETUC to press the European Commission to change the direction of its social and economic policies and to promote solidarity and inclusion.
  • The Spanish CCOO trade union stated that support for Brexit means that the European project is no longer appealing. For this reason, CCOO argued that it is necessary to radically change EU policies, working on a European construction project that guarantees maximum democracy, justice and solidarity levels. The union stated that the austerity measures and neoliberal policies applied by the EU have resulted in unemployment, poverty and social inequality, which have turned people against the European project.
  • The Finnish trade union Akava, however, noted that EU labour market initiatives, such as improving working conditions in precarious employment relationships and updating the Working Hours Directive, might now make better progress without British opposition.

Some employer organisations and unions have focused on the importance of growth and employment-related reforms and of obeying the subsidiarity principle.

  • The French employer organisation, the Movement of the Enterprises of France (MEDEF), for example, expressed regret about the referendum outcome and stated the need to reinforce the political, economic, financial and social convergence of euro zone members. It stated that EU policies should demonstrate their added value and should better respect the subsidiarity principle. This principle is intended to determine whether, in an area where there is joint competence, the EU can take action or should leave the matter to the Member States.
  • A similar view was taken by the Confederation of German Employers’ Associations (BDA), whose president Ingo Kramer called on EU heads of states and governments to implement urgent reforms to increase competitiveness and fairness in the single market. He stated that important trade deals such as the Trans-Atlantic Trade and Investment Partnership (TTIP) should be finalised quickly, as the expected higher economic growth and employment should benefit all EU citizens. He also stressed that the EU should react ‘big on big and small on small things’.
  • The Italian Confederation of Workers’ Trade Unions (CISL) remarked that the EU has to tackle inequalities and problems of integration and to review its choices through a new common debt management, and to implement policies promoting growth and improving democratic governance.
  • The Finnish social partner organisations noted that the referendum result shows that the EU has disappointed many and must now reform, with a focus on growth and employment.
  • According to the Czech employer organisation, SP ČR, Brexit will jeopardise the principles and function of the EU and will cause more ‘exit’ tendencies and consideration of further referendums. SP ČR said it will urge the Czech government to send its citizens and the EU a clear signal that now is not the time for debate about ‘Czexit’ but, on the contrary, it is time for countries that believe in the benefits of membership of the European Economic Area to unite. According to Radek Špicar, vice-president of SP ČR, it is important for the Czech Republic to rally as close as possible to the ‘hard core’. He also stated that the country needs to think seriously about the introduction of the euro as its currency. 
  • In Poland, the Chief Economist of BCC, Stanisław Gomułka, stated  that while Brexit could lead to revision of the EU budget resulting in a reduction of structural funds coming to Poland, it could also bring a chance for the return home of a huge number of Poles. Confederation Lewiatan realistically observed that ‘Brexit will either destroy the EU or speed up reforms which will only make it stronger’. Employers’ of Poland President, Andrzej Malinwski wrote that ‘Brexit is definitely not good news’ but ‘even in such circumstances responsible people should rather seek opportunities than complain’.   
  • Greek employers viewed the result as a major challenge to European policies, which need to change, easing austerity and focusing more on economic development and democratisation. This was echoed by the Greek Prime Minister, who declared that initiatives and decisions are needed in order to replace austerity with growth, unemployment with decent jobs and to promote transparency and democracy.  

First reactions to managing Brexit

In the run-up to the referendum, some organisations produced studies or provided information for members, discussing the likely impacts of Brexit. The Irish business and employer association Ibec, for instance, published a report, The impact of a possible Brexit on Irish business, which outlined how Ireland would be affected if its nearest neighbour, key trading partner and close ally in Europe voted to leave the EU.

After the vote, the first statements showed that social partners and governments are concentrating on how to minimise the economic and social impact of Brexit, and are preparing themselves or are setting up forums to exchange ideas on the way forward.

  • Three Cypriot employers organisations – the Cyprus Chamber of Commerce and Industry (CCCI), the Employers and Industrialists Federation (OEB) and the Institute of Certified Public Accountants of Cyprus (ICPAC) – jointly emphasised the negative consequences of Brexit for Cyprus and called on the social partners to convene urgently to manage these consequences and minimise any negative effects.
  • In Spain, employers’ representatives from CEOE said that Brexit is not good news for companies, but that employers are used to reacting and adapting to changes. They stated that it is now time to start a joint process to minimise any possible negative consequences for businesses. They recommended that European, national and regional institutions should implement effective measures to avoid traumatic consequences and that companies should be taken into account during this process.
  • The Hungarian Trade Union Confederation (MASZSZ) issued a statement in connection with Brexit. It has initiated a discussion within the framework of the tripartite Permanent Consultative Forum of the Competitive Sector and the Government (VKF) and proposed establishing a tripartite working group to deal with the possible impact of Brexit in a systematic manner.
  • In reaction to Brexit, the Czech Prime Minister, Bohuslav Sobotka, announced the creation of a new working group to prepare the Czech position and priorities for negotiations with Britain about its exit from the EU. The working group will comprise representatives of ministries and economic and social partners. He stated:   

The Czech Republic must defend its national interests. One of our important goals will be to maintain equal conditions in the British labour market for Czech citizens, or such as are enjoyed by Britons in the Czech Republic. The working group should also define the Czech priorities for the future shape of the EU, including proposals for reforms which the Union must undergo.

Summary and conclusions

Social partners in most countries across Europe have reacted to Brexit – some before the vote and many more after the outcome of the referendum. Social partners across Europe have unanimously expressed regret at the outcome, while also stating that the will of British voters should be respected. First reactions focused around:

  • the issue of deteriorating working conditions for workers in the UK – mainly a concern voiced by trade unions;
  • the implications for migrant workers or students in and from the UK – also highlighted mainly, but not exclusively, by trade unions;
  • the likely implications for businesses and trade and proposals for managing the change – issues explored by employer organisations.

Social partners also commented on the perceived causes of the vote and the shortcomings of the European project. Deliberations about the future direction that the EU should take were, mainly from the trade union side, focused around calls for a more ‘social union’, with a stronger focus on social rights, more democracy, justice and solidarity. One union stated that EU labour market policies to improve working conditions might now have better prospects without British opposition.

Far fewer reactions from employer organisations were reported, but they can perhaps be best summarised with BUSINESSEUROPE’s statement that there should be ‘more Europe where needed and less where Europe does not add value’. Employers also highlighted that Europe should focus on growth and employment.

None of the first reactions from social partners gave any evidence to suggest that they would be likely to fuel exit debates in their own countries. On the contrary, it appears that social partner organisations across Europe are very committed to the European project and want to make it work.

 

 

 

 

 

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