The UK’s Labour leader has promised to close a legal loophole used to exploit cheap foreign labour by preventing firms from paying agency staff less than permanent workers. Temporary staff are supposed to have the same pay and rights as full time employees under European Union rules. But bosses can get around this by using workers on full-time agency contracts at lower rates. According to the national Trade Union Center, agency staff are paid up to £135 a week less than permanent staff despite working in the same place and doing the same job because of a loophole in the agency workers’ directive.
How Miliband Will Close the Loophole
If Labour wins in 2015, the Government would work with businesses to close the aforementioned loophole which allows companies to undercut staff legally by paying agency workers lower wages. The loophole has allowed major firms in the food, packaging and call-centre sectors to employ workers, often from abroad, on lower rates. While the loophole is legal, companies who use it have been accused of acting unscrupulously by failing to protect the job security of their staff.
In a nutshell, the Labour leader proposes:
- Increasing fines for firms that breach minimum wage legislation
- Banning recruitment agencies from having a policy of hiring only foreign workers
- Stopping the use of "tied housing", which allows agricultural firms to pay less to workers who get accommodation as part of their job
The Labour leader admitted that “We’ve got to prevent a race to the bottom on wages with workers coming here from abroad…The current rules on agency contracts allow employers to use overseas labour to undercut the wages of local workers…We’re going to put a stop to that so we can better protect the living standards of workers in the country.”
Miliband’s Plan Receives Criticism
The Confederation of British Industry condemned his plan. Spokeswoman Katja Hall noted that “The flexible labour market in this country has saved jobs and kept our economy going during tough times…Undermining this flexibility would put the very system which has kept unemployment down at risk”.
She also acknowledged that "the agency directive was not welcomed by business, and further gold plating of EU rules can only cost jobs”.
Hall said many agencies preferred to pay workers through permanent contracts.“This is perfectly legal, it gives employees security of income between jobs,” she added.
On the whole, Miliband promises to block the cheap foreign staff loophole by imposing higher fines on firms that fail to pay the minimum wage, banning recruitment agencies for hiring only from abroad and force large firms hiring skilled workers from outside the EU to take on an apprentice at the same time. His plan aims to improve the living standards of all workers –local and foreign- and give everyone the right to work on a fair basis.