There was always going to be trouble over the Bolkestein EU Posted Workers Directive passed in 1999, but it has taken an ugly recession and fast rising unemployment to bring it to the fore explosively at the Lindsey oil refinery in Lincolnshire. The directive was designed to ensure that the EU was treated as a single labour marketplace where employers had a legal right to hire workers from anywhere in the (now 27) EU countries. The only conditions for the employer are that the employment contract is for a limited time and that local working regulations must be met, e.g. that in the UK at least the minimum wage (now £5.83 per hour) must be paid. But this raises the question as to whether this directive can be used by European companies to deprive local workers of potential jobs and to undercut pay and terms and conditions of work. In this harsh economic downturn this issue will not go away because the directive in its original crude form is not tenable in current political and economic conditions.

Crucially, it is not known what are the pay rates that the Italian firm IREM is paying the 400 Italian and Portuguese workers whom it is importing to undertake the £220 million contract to build a desulphurisation plant at Lindsey. Nor is it clear if it is true, as Unite officials assert, that IREM is pursuing a policy of refusing to accept British workers in any circumstances; if that were true, it is clearly illegal and the Government would have grounds to intervene and re-allocate the contract.
What however is very worrying – since this could be the first flashpoint out of many in future – is that IREM is bringing in foreign workers because they are entitled under the Bolkestein free market directive (Bolkestein was a right-wing Dutch Christian Democrat) to pay significantly below local pay rates, so long as it is not below the national minimum wage. This entitlement was recently reinforced by the notorious Laval case at the European Court of Justice where the ECJ ruled that a company was legally entitled to import foreign workers and pay them at the rate prevailing in the country from which they come (e.g. Latvia), not the rate prevailing at the place where the work was to be undertaken. This established a deregulated labour market place where the employer’s right to pay the lowest rates was elevated above the unions’ collectively negotiated local rate. This judge-made law is a timebomb destined to cause severe labour conflict till it is repealed.
It is important however that the Lindsey dispute should be seen in perspective. This is not about xenophobia, however unfortunate the pronouncement about ‘British jobs for Briish workers’ may have been. Equally misguided are Mandelson’s comments on the Lindsey action that “protectionism would be surefire way of turning recession into depression”. Seeking to stop foreign workers undercutting wage rates is not protectionism. The protectionism that plunged the 1930s into deep depression was trade restraints and restrictive monetary and fiscal policies.
In the last analysis the central issue here is this: do the EU labour market laws override even if the outcome in a vicious recession is a race to the bottom, or do those market laws have to be amended to take account of current economic realities? Clearly they do, because otherwise political tensions in the next weeks and months will be sharply inflamed across the whole EU and local workers in country after country will be victimised. With the election looming and the recession worsening by the day, this is a defining moment for the Government.

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