Worker rights in Europe at risk following Brexit, warns new report

Lower-paid workers in the UK and the EU are at risk from an erosion of their rights following Brexit, according to a new report from the Work Foundation.

The report examines the relationship between employment rights and foreign direct investment (FDI), and assesses whether Brexit will see European countries in a “race to the bottom,” in which wages and rights are cut competitively in order to attract FDI.

However, the authors found that the most likely scenario is what they call a “polarized race,” in which people on middle and low incomes suffer, while those in high-pay, high-productivity jobs benefit from increased investment.

The British government has raised the possibility of repositioning the UK as a deregulated tax haven if a trade deal with the EU is not reached. The study suggests that this would lead to pressure on EU member states to reduce worker rights in order to compete.

Frances O’Grady, general secretary of Britain’s Trades Union Congress (TUC), which commissioned the report, commented that: “The next [UK] government must get a deal with Europe that protects current rights, like paid holidays, equal pay, and fairness for agency workers. And it must guarantee a level playing field with the rest of Europe now and in the future, so working people in Britain don’t fall behind our European neighbors.”

In his IZA World of Labor article on employment protection, the OECD’s Stefano Scarpetta discusses the balance between protecting workers and promoting efficient resource allocation and productivity growth. He writes that: “Employment protection reform should be part of a comprehensive package that promotes better allocation of labor and adaptability in the labor market but also provides safety nets for the unemployed and effective re-employment services.”

The Work Foundation report, Could a Bad Brexit Deal Reduce Workers’ Rights across Europe?, can be downloaded here.