The decision by UK voters to withdraw from the EU has left many employers (and employees) wondering what impact that will have on labor regulations in the UK, many of which are informed by EU policy. Seeking to assuage these fears, David Davis, the newly-appointed Secretary of State for Exiting the European Union, promises in an article at Conservative Home that Brexit won’t affect British employment law:
At the moment all businesses in the UK must comply with EU regulation, even if they export nothing to the EU. This impacts on our global competitiveness. Instead, we should look to match regulation for companies to their primary export markets. To be clear, I am not talking here about employment regulation. All the empirical studies show that it is not employment regulation that stultifies economic growth, but all the other market-related regulations, many of them wholly unnecessary. Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable it should not be a problem for business.
There is also a political, or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights. This is in any event unnecessary, and we can significantly improve our growth rate by stopping the flood of unnecessary market and product regulation.
Davis’s boss, Prime Minister Theresa May, who assumed office on Wednesday, has taken on a populist tone overall, vowing to lead a government “driven not by the interests of a privileged few, but by yours”—i.e., those of Britain’s working class. For instance, she has pledged to require businesses to include worker representatives on their boards of directors, as well as to curb excessive executive compensation:
“The people who run big businesses are supposed to be accountable to outsiders, to non-executive directors, who are supposed to ask the difficult questions,” said May. “In practice, they are drawn from the same, narrow social and professional circles as the executive team and – as we have seen time and time again – the scrutiny they provide is just not good enough. …We’re going to change that system – and we’re going to have not just consumers represented on company boards, but workers as well.”
Workers are represented on the boards of companies in many European countries including Germany, Denmark and Sweden. It is argued that worker voice can help executive teams prioritise long-term decision making, ahead of short-term financial engineering. May’s pledge pleased the Trades Union Congress. General secretary Frances O’Grady said: “The TUC has long argued for workers to be given seats on company boards and remuneration committees.
But not everyone believes these promises. At the Conversation, industrial relations professor Gregor Gall doubts that May’s government will follow through:
First off, the proposal was made at the beginning of what was expected to be a three-month leadership campaign. Plus, the reaction to it from business leaders – important supporters of the Conservative Party – was lukewarm to say the least.
History offers any intrigued trade unionists and socialists further reason to curb their enthusiasm. The last time they were given what seemed like a simple, unambiguous commitment from a prime minister in waiting was from Tony Blair in 1996. He promised to pass a law that allowed union members to gain legal union recognition from a recalcitrant employer where they constituted a simple majority.
The Employment Relations Act 1999 was the result. It brought in the right for workers to be accompanied in grievance or disciplinary hearings, but it also allows employers – as a result of their lobbying – to influence whether this legal union recognition is granted or not. So what resulted was a weak form of recognition and not the one that unions had hoped for or expected. There is no reason to think a similar process of watering down will not happen with May’s proposal. That is assuming it is not a campaign proposal that gets quietly dropped when the so-called “serious business” of being PM – and negotiating Brexit – begins.