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  1. Politics
24 November 2014

Miliband’s dividing line with the Tories on workers’ rights

The Labour leader's vow to end the exploitation of agency workers contrasts with Cameron's inertia. 

By George Eaton

After a weekend defined by the fallout from the Emily Thornberry imbroglio, Labour is hoping to shift the focus back to policy this week. Ed Miliband’s pledge today to rein in “cowboy employment agencies” will be followed tomorrow by major proposals on education from Tristram Hunt. 

The Labour leader’s intervention is around the issue that most animates him: the need to build an economy that works for “the many”, not just “a privileged few” – Labour’s defining general election frame. In a piece on Facebook (an outlet increasingly favoured by Miliband), he vows to close the legal loophole known as the “Swedish derogation”, which allows agencies to pay workers a lower rate than permanent employees if they are paid between assignments. In practice, Labour says, workers sometimes receive the lower rate even though they work regular shifts.

Miliband also reaffirms his commitment to ban employment agencies from recruiting exclusively from abroad and pledges to force employers that exploit workers illegally to sign up to a licensing system. Autorities would have the power to revoke their licence if they are found guilty of misconduct or breaching the law. 

It’s a timely intervention; the number of people on temporary agency contracts is at the highest level since records began in 1997, with the most recent figures showing a 36 per cent increase since 2009 and a 20 per cent increase since last year. 

Miliband writes: 

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There has been a huge increase in temporary work in recent years and most employment agencies play their part in supporting businesses as well as workers who want flexibility. But there is now overwhelming evidence that some are driving down standards, increasing insecurity, and undermining the basic fabric of British life that hard work should be properly paid. Even the industry itself is expressing concern that rogue agencies are breaking the law on the minimum wage, failing to pay their taxes, and exploiting workers to undercut the wages of permanent staff.

These rogue agencies need to know their time is up and we will act. We will close the legal loophole which allows some to undercut the wages of permanent staff. We will stop them from recruiting exclusively from abroad.  And we will serve notice on the rogue agencies that they must clean up their act. We will begin consultations now, even before the next election, on the different ways this can happen such as through a licensing system so we can be sure that agencies are complying with basic standards or stopped from operating.

The next election is the chance to take a new direction for our country: halting the race to the bottom and embarking once more on a race to the top where we build an economy that works for most people, not just a few. Britain is too unequal. We will change it. This is the mission for our party and the next Labour government.

By adopting this stance, Miliband has carved a potent dividing line with the Conservatives. Rather than offering greater protection to workers in what is one of the least regulated labour markets in the developed world, the Tories are proposing further liberalisation, including the full implementation of the Beecroft proposals (such as no-fault dismissal or “hire and fire”) and withdrawal from the EU social chapter, the document that guarantees workers paid holidays, paternity and maternity leave, and part-time workers the same rights as their full-time counterparts. 

Some “blue collar” Tories, such as Harlow MP Robert Halfon, have made the case for stronger employment rights, including the end of the Swedish derogation. In a piece last year for the New Statesman on how Tesco had exploited the loophole, Halfon wrote: 

Agency staff are victims too. Tesco has insisted that agency workers will not be allowed to transfer to another site. Instead, they will be shown the door. There are around 140 of these people, mostly from eastern Europe, who also work extremely long hours. This is despite being paid less for doing exactly the same work as permanent Tesco colleagues. I have been told that Tesco are able to do this by employing the “Swedish Derogation” loophole in the Agency Workers Regulations: i.e. allowing an agency to employ staff on a minimum contract, where they continue to be paid between assignments, but must waive their rights to equal pay. Parliament should consider if this practice is really in keeping with the spirit of British workers’ rights.

But Cameron, who on issues such as these is an orthodox Thatcherite, has had nothing to say on the subject. 

While Ukip voters are often described as right-wing, polls consistently show that they support a more economically interventionist state and tougher regulation of big business. By contrasting his willingness to act with the Tories’ inertia, Miliband could win a hearing from some of those who have abandoned his party. 

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