Friday 24 February 2017

Double-edged swords

One of the arguments often used by opponents of membership of the EU is that the UK could compete more successfully in the world if it was not subject to EU rules on issues such as employment law.  Flexibility in the field of employment, runs the argument, makes it easier to attract inward investment. 
Despite the harmonisation which has taken place, there are still differences in employment law even now; the UK labour market is more flexible than the labour market in say Germany or France.  Whether that’s a good thing or not is a matter of opinion, but I’ll accept that, when it comes to attracting inward investment, perceived flexibility is more advantageous than perceived inflexibility.  It’s a double-edged sword, though.  That which makes it easier to attract some types of investment also makes it easier for the same companies to disinvest. 
One very current real example is the proposed take-over of the European arm of General Motors by the parent company of Citroen and Peugeot.  It is likely to lead to a degree of rationalisation as the various parts of the company are brought together – and that may lead to redundancies or even plant closures.  For political reasons, they may not be immediate, but over the longer term, they are highly likely.  Faced with a choice of closing plants in Germany or the UK, which are most likely to close?  Well, one of the results of the UK’s much-vaunted ‘flexibility’ in the labour market is that it’s actually much easier and cheaper to sack workers here than it is to sack them in Germany.
More generally, whilst Germany has not been immune to the trend which has seen manufacturing jobs move overseas, it has been less badly impacted than the UK.  Whilst it would be a mistake to attribute the whole of this to a single factor, the relative ease with which manufacturing plants can be closed in the UK is undoubtedly one of the factors underlying that difference.
It would be over-simplistic to argue that continued membership of the EU per se is enough to provide job security for UK workers, although it is one of a number of cases where further harmonisation of rules across Europe would help.  But there is, after all, nothing to prevent a UK free of so-called ‘Brussels interference’ from implementing its own rules to protect UK jobs.  But it would be naïve to believe that that is the how the Brexiteers intend to operate their new-found ‘freedom’ to make our own rules.  Creation of an offshore tax haven has more to do with removing workers’ rights than enhancing them. 
When they come to write future history, people will surely marvel at how easy it was to persuade those who stood to lose most from deregulation to support it so enthusiastically.

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