Brexit was supposed to give the UK freedom to deregulate the economy and pursue fast growth and prosperity. However, successive governments have failed to deliver on this vision. Employment policy illustrates why. Paul Copeland writes that the facts contradict the narrative that the EU’s employment policy threatened the UK’s flexible economic model.
This article is part of our series on policymaking in the UK after Brexit. For more analysis, visit the focus page.
For those on the Eurosceptic-right of the political spectrum, independence from the EU would have provided an opportunity to reboot and reposition the British economy to create a “Singapore-on-Thames”. Free from EU regulation, a fully deregulated economy would end the UK’s anaemic economic growth, with the benefits of Brexit providing significant increases to economic prosperity.
Since the UK left the EU, successive governments have attempted to repeal EU retained law in the hope of delivering this vision, but as is often the case with the UK’s relationship with the EU, there is a gap between the rhetoric espoused by politicians and the reality of the situation.
As is often the case with the UK’s relationship with the EU, there is a gap between the rhetoric espoused by politicians and the reality of the situation.
My recent research on the impact of EU employment policy both during and beyond the UK’s membership illustrates this tension within British politics. Successive UK governments at Westminster, from both the Labour and Conservative Parties, argued that EU employment legislation posed a threat to competitiveness. As noted by Barysch, when the UK was an EU member state, Britain’s European neighbours did “not get quite as worked up about EU social rules as the UK”. Britain opposed integration in the field and built coalitions with like-minded governments in the European Council to block or dilute any rights or provisions within proposed legislation.
Therefore, one would have expected the EU employment directives to increase the rights of UK workers significantly and act as a drag on competitiveness. Such evidence, however, is lacking. There are areas in which UK employment law exceeds EU minimum standards, including entitlement to more generous annual leave, the right to flexible working, and more generous maternity as well as paternity leave. In addition, the first New Labour Government (1997-2001) introduced a minimum wage in 1998 while the EU’s Minimum Wage Directive was agreed only in 2022.
The fundamental issue from the UK’s point of view was twofold:
First, that some EU legislation went beyond minimum standards with several directives falling into this category, including the Working Time Directive, the Posting of Workers Directive, The Temporary Agency Workers’ Directive, and the Transfer of Undertakings Regulations.
Second, EU directives lacked flexibility and were perceived as being too detailed and too rigid regarding their implementation for the UK’s employment regime, which adopts a more individualistic and risk-based approach. In the area of health and safety, for example, the UK’s model of enforcing regulation is one in which decisions relating to the perceived risk of a task at work should be taken at the local level, which should strike the correct balance between cost and risk. This contrasts with what the UK regards as the Continental model of health and safety regulation, which is based on hazard (something potentially harmful) rather than risk (the likelihood that harm will happen).
Successive prime ministers from Thatcher to Cameron positioned EU employment policy as a threat to the UK’s flexible economic model. In reality, quantifying the cost of such policies is difficult, to say the least. The powerful rhetoric served not only to limit the supposed benefits of EU membership to the electorate, but also the potential impact of EU policy on the UK’s employment regime. EU employment policy sat alongside that of the UK’s. Any debate surrounding a more expansive vision of employment policy was curtailed by the supposed dangers of what came from the EU.
Given the UK’s long-held opposition to EU employment policy and the supposed “Brexit opportunities” afforded by “independence”, it could be assumed that EU employment policy would be dismantled and as an independent country, the UK would move towards a fully deregulated labour market. The process of transposing EU directives has come to an abrupt end and the UK is no longer required to implement EU legislation it regards as threatening its employment regime and undermining competitiveness. This would provide a significant boost to the UK economy.
Slow policy drift
Nevertheless, the outlook for UK employment policy is more nuanced than a simple bonfire of regulations and will be characterised by a slow and piecemeal policy drift between the UK and the EU, although the extent remains unclear.
Existing EU employment regulation remains: First, the Trade and Cooperation Agreement between the UK and the EU specifies that the UK is not bound by future EU employment directives, but EU employment legislation that was already part of UK law when it formally departed the EU (31 December 2020) is to remain. So much for a bonfire of regulations, not least because the agreement was voted through Parliament by MPs who also support the ideology of a “Singapore-on-Thames”.
Protections cannot be lowered: Furthermore, the non-regression principle commits both parties to high levels of employment and social protection which cannot be lowered in a manner affecting trade or investment below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards.
Free from future Court of Justice rulings: In addition to this, while the UK is bound by existing EU legislation, it is not bound to implement any future rulings from the Court of Justice of the European Union (CJEU) that relate to that legislation. Given that such rulings have had a significant impact on the interpretation and transposition of EU employment law, the Agreement sets in motion a process through which EU employment law will evolve in accordance with CJEU rulings, while that within the UK remains historically “fixed”.
Worker rights: In addition to the Agreement, a second dimension to policy drift relates to the current momentum surrounding EU employment policy. The 2016 UK referendum corresponded with a renewed interest within the EU to further integrate within the social dimension and several directives have been agreed to extend the rights of workers, which the UK is no longer required to implement.
While the Trade and Cooperation Agreement has put in place the potential conditions of policy drift, the extent of such remains an open question. On the one hand, the Conservative Party appears wielded to the idea of repealing EU retained law, including certain aspects of EU employment legislation (read: your employment rights). When the Conservative Party in Government has proposed such ideas, it has received criticism from opposition parties and the trade union movement – not to mention the extent to which a UK Government can do this in the context of its legal commitments to the EU. Nevertheless, the situation highlights the somewhat limited commitment within the Conservative Party for extending employment rights – and this will generate a process of policy drift.
Meanwhile, future policy drift under Labour-led governments will be minimal. The Labour Party’s Employment Rights Green Paper outlines its vision for UK employment legislation up to 2030. While it contains many aspirations for UK workers, some of which have either been agreed or are being agreed at the EU level, the background narrative is that UK businesses, particularly small and medium-sized companies, require flexibility, just like during the New Labour Governments.
While the extent of the overall policy drift remains unclear, the result will be to the detriment of UK workers. Finally, even if the UK could successfully repeal EU employment legislation, it will not provide the boost to growth and jobs claimed by the Eurosceptic right. But then such red herrings never do provide a solution, rather they serve to detract from political failure.
This blog post draws on the findings of the recent research article “Mind the gap! UK employment policy both during and beyond EU membership: from policy layering to policy drift“, (Journal of European Public Policy, Special Issue: British Policy-making After Brexit, 2023) It was originally published by LSE Business Review blog.
All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.
Image credit: Remy Gieling via Unsplash.