European Standing Committee C
Wednesday 10 July 2002
[MR. BILL O'BRIEN in the Chair]
Working Conditions for Temporary Workers
The Minister for Employment Relations, Industry and the Regions (Alan Johnson): I have replied to Lord Brabazon's letter of 20 June that sought further information on the Committee's behalf. I signed the reply on Monday 8 July, but it may not yet have reached Committee members, so copies are available on the Table. The consultation document is also available. We are consulting for 16 weeks on the European Commission proposal for a directive on agency workers, which was published in March.
Mr. Philip Hammond (Runnymede and Weybridge): I am sorry to interrupt the Minister almost before he has started, but he will know that the Government have been criticised in the past for putting documents out to consultation just before the summer holidays. Many people who wish to comment are away during August. Can he extend the consultation period to take account of the effective four-week blackout in the middle of it?
Alan Johnson: We published the proposals on 1 July and we are allowing 16 weeks for consultation. To a degree, that is governed by the speed at which the Commission works. The period is usually 12 weeks, but we have allowed 16, so we have added four weeks to cover August, when we are all in Tuscany, Blackpool, Bournemouth or wherever. I hope that that reassures the hon. Gentleman that we have tried our best to ensure that there is a proper consultation period.
As I said, the proposal for a directive was published in March. That followed the breakdown of negotiations between the European-level social partners, who had aimed to agree a framework on working conditions for temporary agency workers. The proposal is still in the early stages of negotiations. It was introduced formally to the Council of Ministers early in June, and working group discussions on it are beginning. The Employment and Social Affairs Committee of the European Parliament is also discussing the proposal and hopes to produce a report in the autumn, before a vote of the European Parliament in plenary.
The proposal applies to temporary workers who work for an agency and are placed with a user organisation under whose supervision they work. The proposal requires that agency workers should not have less favourable basic working and employment conditions than similar workers employed by the user company in which they work. The equal treatment requirement need not apply in certain situations, which I shall deal with later. The directive also includes measures intended to help agency workers to find permanent jobs if that is what they are looking for.
Column Number: 004
The Commission's explanatory memorandum on the proposal states that it aims to promote employment growth and that the directive should contribute to the Lisbon targets. These require increased labour market participation by 2010. I have produced a regulatory impact assessment on the proposal, which estimates its likely costs and benefits. It has been difficult to establish the overall labour market effect that it might have, but I would be extremely concerned if the proposals had a negative effect on the demand for agency workers, and therefore on overall employment levels.
Last week, my Department launched a consultation that seeks views on the likely impact of the proposal in the UK. I hope that it will give us a better idea of how the proposal will affect the UK labour market, and inform our estimates of the costs and benefits to agencies, workers and user organisations. We asked for responses to be given by 18 October, and I shall inform the Committee of the outcome of the consultation and the progress of negotiations.
The Government are not opposed to the principle of a directive on agency workers. We welcome the Commission's intention to protect agency workers and promote agency work in the European Union. However, it is important that the directive works in practice—
Mr. Hammond: Will the Minister give way?
The Chairman: Order. The procedure is that the Minister makes a statement. We then have until 11.30 am for questions.
Alan Johnson: Thank you, Mr. O'Brien.
It is important that the directive works in practice in the UK, which has a different agency market and history of agency workers from other EU countries. It is also important that it helps us to deliver full employment. We are concerned that the current proposal will do neither of those. We would like further flexibilities to be introduced to ensure that the proposal promotes employment growth and helps us to meet the Lisbon target of 20 million more jobs by 2010. The proposal allows member states to derogate from it where this has been agreed collectively, where agency workers are employed on permanent contracts, and where their assignments can be accomplished in six weeks or less. We welcome those flexibilities in principle, but they would not necessarily suit the UK labour market in practice. Few agency workers are union members, which makes collective agreement unlikely, and permanent contracts may not suit many agency workers who choose to temp because it offers them greater flexibility than permanent work.
We support an increase in the length of the six-week period, which would reinforce the idea that agency workers should generally be used in temporary jobs. After about a year to 18 months in the user company, there is a good case for giving agency workers the same conditions as other workers in that company. Where agency workers are in genuinely temporary positions, there may be a danger that an equal treatment requirement would impose administrative burdens that discourage the use of agency workers. We are, of course, considering other ways in which additional
Column Number: 005
flexibilities could be introduced to the proposal that protected agency workers without threatening their job opportunities.
The proposal lists the basic working and employment conditions to which it applies. One of those conditions is pay. The Government believe that the current proposal cannot apply to pay, as it is subject to the exclusion in article 137(6) of the treaty. When we agreed to the directives on fixed-term and part-time work, we stated in the Council minutes that they could not apply to pay, as their legal bases derived from article 137, and as they were subject to the exclusion in article 137(6).
I look forward to hearing the Committee's views.
The Chairman: We now have until 11.30 am for short and direct questions asked one at a time. We will then debate the motion.
Mr. Hammond: I want to pick up a point that the Minister made in his opening remarks. My understanding from reading what he said to the European Scrutiny Committee was that the Government did not support the principle of a European directive to achieve the objectives. He told that Committee:
''The Government intends to examine this case further and seek certain clarifications from the Commission. In particular, it is not clear that the objectives in question cannot be sufficiently achieved by member states' action.''
I came to the debate this morning under the apprehension that the Government were still minded to resist the EU's inclination to deal with the matter by a directive. The Minister appears to have sold the pass between giving the report to the European Scrutiny Committee and today. Will he confirm that the Government have shifted their position?
Alan Johnson: Our concerns were set out in my opening statement. We have no problem with the concept that agency workers should be protected. They are already protected in legislation on the minimum wage and working time directive, and we are reviewing other protections that are applied domestically. We have no problems with the proposal's concept related to job opportunities and ensuring that temporary workers are informed about permanent positions in that company. Our problem relates to terms and conditions—as it did when I made my contribution to the European Scrutiny Committee. That is the problem on which the social partners broke down and about which there are legitimate concerns.
Dr. Stephen Ladyman (South Thanet): Many of the negotiations have correctly been about protecting workers whom employers might be tempted to pay less than their normal staff. Before I became an MP, I worked in the IT world, in which temporary workers were often paid a lot more than permanent staff because they did not have security of tenure or the benefits that other staff received, but had special skills. What negotiations are taking place to protect permanent staff, who might one day find that temporary staff get all the benefits and the extra money?
Alan Johnson: My hon. Friend raises an important point. Even on the stark and crude statistics that we
Column Number: 006
have to analyse, we can see that in two of the categories of workers in the regulatory impact assessment, temporary workers earn more than permanent ones. Personal services form another category, and those categories account for 17 per cent. of agency workers. There is not a direct relationship between the employee and the company—there is a third party, and people work for an agency that places them with a company—so we are concerned that the directive could have dramatic effects. We could see the situation predicted by my hon. Friend. Of course, the directive would not require companies to pay less, but it would distort the balance of packages that are currently available. That is an important part of our concerns.
Dr. Andrew Murrison (Westbury): I am concerned that a major employer of agency staff is not the private sector but the Government, particularly in the health service. Many health service employees choose to work as agency workers, not least because they are better paid than if they were on a permanent contract. My question relates to the regulatory impact assessment and, specifically, the Minister's thoughts on the directive's impact on the health service. Given that many agency workers are better paid than permanent staff, does he think that it will have a positive impact on the health service? I ask the question because the Government's interest in the regulations might not be the same as that of agency workers.