黑洞社区

Bolkestein鈥檚 monster

On the continent, its critics call it 鈥淭he Frankenstein Directive鈥�. So angry are they, that tomorrow more than 50,000 members of the European Trade Union Confederation will descend on Brussels to demonstrate against European commission plans to introduce what is more commonly known as either the Bolkestein or services directive.

The directive is a huge threat to the UK construction industry. It is currently in draft form and will go for its first reading in the European parliament in June. If it is adopted, it could, at the very least, undermine health and safety initiatives and rip up the collective bargaining agreements established between unions and contractors. Yet there has been no uproar in this country; only recently has it been deemed worthy of a few column inches in the broadsheets. This is despite the directive being introduced by European Union鈥檚 single market commissioner Frits Bolkestein nearly 15 months ago.

Here, 黑洞社区 explains what the directive will demand of EU countries and the consequences for the construction sector, why the UK has kicked up so little fuss and why recent hints from the commission that it is willing to water down its proposals may be less than sincere.

What is Bolkestein?

Blame the French and Germans: they had a squabble over a blackcurrant cordial more than a quarter of a century ago. This became probably the most famous legal case in EU history, and created the precedent for Bolkestein鈥檚 proposal.

The French producer of a liqueur called Cassis de Dijon wanted to export its product to Germany. The German authorities didn鈥檛 want it because its alcohol content was 15% by volume, and German law demanded that a liqueur have a minimum of 25%. The French took the case to the European Court of Justice and won. German law was superseded because it was a barrier to trade, and the judgment became the legal keystone of the single market.

There is also the possibility of poor site conditions in the UK as domestic companies drive down costs to compete

Graham Copp, head of research, The Centre for a Social Europe

This was 1978. Fast forward 26 years to 2004 and Bolkestein鈥檚 suggestion that this ruling should also apply to services, including construction. It is based largely on the 鈥渃ountry of origin鈥� principle. For example, if a contractor from the Czech Republic wanted to bid for work in the UK it would traditionally have to abide by British regulations. Bolkestein argued that this is a barrier to trade, as UK contractors, with their knowledge of domestic regulations, would have a competitive advantage. So under the Bolkestein directive, the Czech contractor would have to abide only by the regulations of its own country 鈥� which may be less rigorous than the UK鈥檚.

An example of what this could mean occurred in Sweden last month. The municipality of Vaxholm, near Stockholm, entered into an agreement with Laval un Partneri, a Latvian contractor, to renovate a school. The company signed its collective agreement with Latvian workers, not Swedes, who would have been more expensive. As a result, the Latvian bid won, and the Swedish trade union movement blockaded the school site. Following an unsuccessful court challenge to lift the blockade, the deal was terminated. Under Bolkestein, the unions would probably have lost that case.

Graham Copp, head of research at the Centre for a Social Europe, a left-leaning think tank, says that Bolkestein would have a far greater impact than simply overturning collective bargaining and the national minimum wage 鈥� it could also wreck recent health and safety advances.

In a letter responding to concerns raised last year by John Bowis, the Conservative MEP for London, Bolkestein said that EU states would be free to apply their own health and safety standards. But Copp says: 鈥淚f you use foreign labour, that is generally on lower wages there are obvious safety implications with the quality of their training and ability to read signs. There is also the possibility of poor site conditions as UK companies try to drive down costs to compete.鈥� In effect, this would force countries to take a minimalist approach to health and safety and other key regulations to ensure they remain competitive.

Copp is also worried that British firms could establish 鈥渓etterbox鈥� headquarters in eastern European countries. One concerned UCATT spokesperson 鈥� who put the point in a submission on the directive to the DTI last year 鈥� argues: 鈥淥ne of the problems is that it would encourage service companies to set up operations in countries with lower standards. It鈥檚 an absolute recipe for disaster. You wouldn鈥檛 know which standards would apply on what project.鈥�

It is likely that Bolkestein would supersede the Posted Workers Directive, which states that people temporarily working abroad in the EU are entitled to the conditions and terms of the host. For example, this is of benefit to the 60,000 British operatives working in Germany. Although that directive came into force in late 1999, Bolkestein could reverse it. The Major Contractors Group says: 鈥淚n the case of the Posted Workers Directive, workers sent to work in another member state are subject to the host鈥檚 health and safety regulations. This approach is logical and should be adopted for the services directive.鈥�

It would encourage companies to set up operations in countries with lower standards. It鈥檚 an absolute recipe for disaster

UCATT spokesperson

Why the UK has barely responded

Despite the concerns of the MCG and UCATT, both admit that they have little to say on Bolkestein at the moment. An MCG spokesman says that it will return to the matter in later rounds of consultation. The UCATT spokesperson says: 鈥淭he reason why the UK has done so little on the matter is probably because standards are already pretty low in this country at the moment. It鈥檚 been much bigger in Belgium and Holland where they have a lot more to lose. The concerns here have been greater in the public sector 鈥� for example health 鈥� than in construction.鈥�

Perhaps. But one man who has been debating the issue is Bob Blackman, the T&G union鈥檚 construction officer. He has been in touch with politicians such as Peter Skinner, Labour鈥檚 MEP for the South-east, to argue that the UK鈥檚 standards are higher than many of the countries that have joined the EU in recent times. He says: 鈥淚鈥檓 concerned about exploitation 鈥� people brought over in really poor conditions. We know that in the UK we have a real skills problem, but having said that, we don鈥檛 want this to be used to undermine what we have achieved in welfare.鈥�

Blackman has also spoken to Werner Buelen, who is political secretary for the European Federation of 黑洞社区 and Woodworkers, and has effectively led its 鈥淭he Bolkestein Directive: No!鈥� campaign. Buelen is adamant that the UK鈥檚 response has been inadequate: 鈥淚鈥檝e tried to arrange meetings with construction unions, but there has been little response,鈥� he says.

Buelen concedes that UK interest in the directive has started to increase in the past few weeks. Last week, the Construction Industry Council submitted evidence opposing it to the House of Lords鈥� EU committee. However, he argues that the British market is highly liberalised, and so Bolkestein looks like a continuation of that process. In France, by contrast, there are concerns that Bolkestein鈥檚 proposal would ultimately take away every French worker鈥檚 legal right to a 35-hour week.

Yet it is understood that, privately, even Buelen has been frustrated in his attempts at getting MEPs to hear his case.

It鈥檚 difficult for the commission to make many changes after the first reading, as the momentum is with the parliament then

Political lobbyist

Can the directive be changed?

It probably should not come as a surprise that MEPs have little interest in Buelen鈥檚 argument. The centre of gravity of the parliament is liberal and centre-right, and although they don鈥檛 have the party discipline of the House of Commons, it seems that the 383 MEPS who comprise the right and liberal majority are in favour of Bolkestein.

Where the directive may run into opposition is from within the commission itself. Charlie McCreevy, Bolkestein鈥檚 successor as internal market commissioner, this month publicly criticised the way the directive had been drafted and said the country of origin principle would be reviewed.

Socialist MEPs hailed this as a major victory; others are less certain. Although McCreevy has said the directive would 鈥渘ot fly鈥� politically, many members of the current administration are still backing it. Jos茅 Manuel Barroso, the commission president, this week ruled out dropping the country of origin principle, albeit with 鈥渁ppropriate safeguards鈥�, and trade commissioner Peter Mandelson is behind it.

More importantly, most of the amendments McCreevy is considering will not be made until after the bill鈥檚 first reading in the European parliament in June. One political lobbyist points out that the rightwing MEPs could push the directive through in broadly its current format: 鈥淚t鈥檚 difficult for the commission to make many changes after the first reading, because the momentum is with the parliament then. If the parliament does not want many amendments, then they won鈥檛 be made.鈥�

Ian Davidson MP, who is vice chairman of the House of Commons鈥� construction group, goes further. He notes that there are referendums on the European constitution in France and Holland, both of which are opposed to Bolkestein鈥檚 ideas. To secure a yes vote, it may well be that the commission is aiming to ease these countries鈥� fears. 鈥淢cCreevy is deliberately trying to dampen things down while the referendums are active,鈥� says Davidson. This theory is made more plausible by McCreevy鈥檚 record as Ireland鈥檚 finance minister in the 1990s, when he was an ultra-liberal.

It seems that 鈥淔rankenstein鈥� might well be the right analogy for this directive: much of the constituent parts of Bolkestein鈥檚 bill might seem to be dead, but the monster is very much alive.