Working Conditions for Temporary Workers

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Alan Johnson: I am not willing to give a categorical answer to that question. What I can say is that there is no provision to take the Commission to court until there is a proposal that has passed through all its channels. It cannot be challenged until there is something to challenge. We are certainly not at that stage. I say to the hon. Gentleman—he is almost becoming an hon. Friend as we see so much of each other—that the Recruitment and Employment Confederation, the body responsible for employment agencies, and the Confederation of British Industry agree that we need to exert influence in this round of discussion and consultation to ensure that we are not misrepresented and to argue our corner effectively.

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The Chairman: If there are no more questions, I call on the Minister to move the motion.

Motion made, and Question proposed,

    That the Committee takes note of European Union Document No. 7430/02, draft Directive of the European Parliament and of the Council on working conditions for temporary workers; and supports the Government's initial approach to negotiations.—[Alan Johnson.]

10.58 am

Mr. Hammond: The proposal from the European Union for a directive is a step too far, as the Minister knows. I am disappointed with what he has said this morning; I thought that I was coming here to make it clear that if the Government robustly maintained and defended their position in representations to the European Scrutiny Committee, they would enjoy the unstinting support of the Opposition. However, what has been said so far suggests that the Government, as they have done on many other occasions, have already caved in to the European Commission and have begun the process of constant retreat that is evident in many other directives. The Government initially take a sensible position and defend our national interest, only to find that the Commission and other member states are resolute in pushing forward. The Government then retreat.

The Minister told the Scrutiny Committee that the issue of subsidiarity had to be dealt with, and that the protection of agency workers could be better dealt with by member states. I concur with that view for many reasons, not least because the UK temporary worker market is a very different scene from that in many other European countries.

Having taken that position, however, the Minister has retreated from it in the space of a few weeks. He has conceded that there will be a European directive and has said that the important thing now is to try to ''exert influence'' in the framing of it. Unfortunately, I have bad news for him: he has no influence to exert. If the Commission gets away with the argument that this matter should properly be dealt with by a European directive, the UK's national interest will be steamrollered in the process.

The Minister has no influence because the Government, unwisely, naively or for whatever reason, signed the social chapter. [Interruption.] The social chapter is extremely pertinent to the debate, because we would not be discussing the scope or otherwise of article 137 if the Government had not signed it. We would be debating whether the UK, in its own interest and the interests of protecting British workers, businesses and agencies, wanted to implement domestic legislation that gave the sort of protections that we are discussing.

I am not clear about the extent of the problem that needs to be addressed, but we shall explore that in a moment. From the Minister's tone, he seems not to be clear either. No one on the Committee can have concerns about introducing basic protections to ensure that there is not gross abuse in the system, but the EU clearly has an agenda that is not appropriate to the temporary worker situation in the UK.

Several hon. Members rose—

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Mr. Hammond: I shall give way first to the hon. Member for South Thanet.

Dr. Ladyman: Does the hon. Gentleman realise what would happen if the situation that he has described came about as he has suggested? Agencies would want to base themselves in a particular European Union country, because it would keep their costs as low as possible. They would then employ British staff from abroad, thereby undermining the position of those workers and of British agencies, because they would not be able to compete. [Interruption.]

Mr. Hammond: The hon. Gentleman is wrong. I am surprised that the Minister muttered ''exactly'' from a sedentary position, because in evidence to the Scrutiny Committee, he drew attention to the fact that directive 96/71 already deals with the transnational posting of temporary workers. The EU has therefore dealt with what is properly an EU matter. We are talking about whether one size fits all—whether a single set of rules can properly regulate the very different markets for temporary workers in member states. This is not a party political point; I had hoped that the Government recognised the problem.

Mr. Ivan Henderson: Will the hon. Gentleman define what he means by ''basic protections'' for workers?

Mr. Hammond: I mean the sort of issues that the Minister has been talking about: employment conditions that ensure that there is not gross abuse. He and I have enjoyed such a debate on a range of issues. I have said many times—most recently on Monday evening, when we debated the then Employment Bill—that the Opposition will support measures that are designed to deal with abuse. An example of such abuse, cited in a debate on that Bill, was of a worker on a fixed-term, six-monthly contract who had been working for the same employer for 20 years. That is an abuse of the process, and we will support the Government in regulating to deal with such abuse. However, the information available does not make it apparent to me or, I believe, to the Minister, that there is any issue of substance to be addressed in relation to agency workers.

Stephen Hesford (Wirral, West): If this is not a party political point, which I believe it is, why does the hon. Gentleman mention the social chapter? He told the Committee that he is not sure what the problem is in relation to agency working, so what is his point? If he is not sure what the problem is, what concerns him about the Government's initial approach to these questions?

Mr. Hammond: I was not greatly concerned by the Government's initial approach, as set out in the Minister's statement to the European Scrutiny Committee. It warmed my heart, as it set out three things: first, a robust position to challenge, on grounds of subsidiarity, whether agency working was an appropriate issue on which the EU should legislate by directive; secondly, to challenge the legal base of the Commission's involvement; and thirdly, if all else failed, to seek the maximum flexibility for national implementation—in other words, to ensure that the

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directive provided as loose a framework as possible to ensure that we could deal with agency working as far as possible in the context of our own national market. I am sure that the Minister would be the first to acknowledge that the UK market is different from the national markets for temporary workers in many other EU countries.

I want to make some progress on the background to this issue. The UK has more temporary workers than any other EU member state. The Minister will correct me if I am wrong. The UK market is complex, with a hugely diverse range of employees. Highly paid and highly skilled employees, as well as the low paid, engage in temporary work. The Minister may query my comment that the UK has the largest number of temporary workers within the EU. About a third of the UK's employees are temporary workers. Temporary workers make up a higher percentage of the work forces of other countries, but I doubt that any other countries have a higher absolute number. No doubt the Minister's facts and figures will reach him in a moment.

From the point of view of workers, temporary work can provide a route back into full-time permanent employment, if that is what they want. However, it can, and increasingly does, provide an opportunity for flexible forms of work that allow people to design their own work-life balance. A hurdle, which we must overcome in any debate about temporary working, is the mindset that is fixed in a period of high unemployment and employment insecurity.

Mr. Henderson: It is.

Mr. Hammond: The hon. Gentleman says that it is, but we must recognise that the employment situation in large parts of the country is very different from the situation that I described. Workers can choose to go into temporary work, if they can afford it, reasonably confident that they can take a period out of work, return to the workplace and find a new temporary engagement without much difficulty. That does not apply in some areas, but we must recognise that the phenomenon of deliberate and voluntary temporary work assignments is an increasing part of our employment scene.

From a business point of view, temporary workers provide flexibility to respond to changes in the economy. Crucially, they also provide flexibility to respond to the barrage of Government legislation to create new statutory rights to time off. Every time that the Government create such a statutory right, there must be a corresponding availability of temporary labour to cover that worker's position, if necessary, while he is absent. The Government must recognise that in imposing additional requirements on business to release workers for statutory paternity, adoption or parental leave, or the longer period of maternity leave, they must secure the supply side of the labour market and ensure at least that institutional arrangements do not deter an adequate supply of temporary workers.

I suggest that the primary motive for those employing temporary workers is not, as some would wish to paint, to try to secure cheap labour. Temporary workers are not cheap, and a

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Recruitment and Employment Confederation survey estimated that 60 per cent. of temporary workers already earn the equivalent of, or more than, their permanent counterparts. The employment of temporary workers is primarily about flexibility, not avoiding labour costs.

Having examined the situation from the point of view of both workers and business, it is worth mentioning the agency sector. As the Minister said, the sector is different in this country from the rest of the European Union, and is made up primarily of small and medium-sized enterprises. Even the four large players have only a small market share, and the sector is currently under great pressure, with turnover and margins both being squeezed.

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