28 June 2016

By Dr Alex Balch, Senior Lecturer in Politics and International Relations, The University of Liverpool

As the dust settles after the EU referendum, the implications of Brexit for working conditions in the UK will surely be significant but it could be some time before these consequences become clear.

In the meantime a number of important changes have been made to the way in which the UK implements and enforces labour rights and working conditions. This has never been an area of competence for the EU, but despite having full ‘sovereignty’ in this area, there have long been serious doubts about the integrity and effectiveness of UK labour market governance in preventing issues such as exploitation or forced labour.

Almost forgotten in the intensity of the debate over EU membership, the new system promises, according to the government, a new ‘coherent enforcement strategy to crack down on serious exploitation of workers’. There is now a new Director of Labour Market Enforcement, there are changes to the function and powers of the Gangmasters Licensing Authority and there are new instruments for enforcement agencies, including labour market enforcement (LME) ‘undertakings’ and ‘orders’.

Does the new system address the gaps and weaknesses so often identified in UK labour market regulation?

Nature abhors a vacuum, or so we are told. In this case there has long been a vacuum in terms of the absence of an economy-wide labour inspectorate in the UK (something quite unusual compared to other similar European countries). So in one sense this has finally been been filled with the Director of Labour Market Enforcement and the reconstitution of the Gangmasters Licensing Authority into the Gangmasters and Labour Abuse Authority (GLAA) as an economy-wide agency (it had previously been limited to certain sectors).

However, the new system is undermined by conflicting policy priorities that threaten its chances of actually reducing exploitation. It is notable that this strategy was introduced as Part One of the Immigration Act (2016) and in the response to consultation it is difficult to miss the constant references to ‘modern slavery’.

Why is this combination of policy areas problematic? First, it formalises the fusion of enforcement of labour standards with enforcement of immigration controls and this raises a number of concerns. The most obvious is that some types of workers such as irregular immigrants – among the most likely to be subject to intimidation and exploitation in the labour market – will be less willing to report problems if that information is immediately shared with the immigration authorities. Second, by linking to the Modern Slavery Act and drawing on the rhetoric of anti-slavery, the government indulges what Janie Chuang has referred to as the problem of ‘exploitation creep’. This is where different types of labour market exploitation become re-classified as ‘modern slavery’ – to heighten moral condemnation and impose an organised crime paradigm – thereby ignoring the structural causes of exploitation.

Return of the Big ‘Easi’?

In the end, much will depend on the resources and independence granted to the Director of Labour Market Enforcement (applications close 4th July 2016), with the real danger that a key objective for the post-holder will be to indirectly weaken protections by rationalising and pruning existing enforcement activities. It also remains to be seen what will be the impact of the GLA’s transformation into the GLAA, which will only happen in October 2016. When it was formed in 2005, the GLA and its licensing system for labour providers in certain sectors was created to address catastrophic failures to protect workers. In the decade or so since then it has since scored some significant successes in stopping unscrupulous businesses from exploiting workers, but has always been under pressure to reduce the ‘burden’ of regulation.

The GLA’s predecessor – EASI (Employment Agency Standards Inspectorate) was rather aptly named as it exemplified the ‘light-touch’ approach of the UK: EASI had a total of 12 inspectors to cover the entire UK economy which where there are at least 17,000 recruitment agents. The GLA put in place a better ratio because it was sector-specific, and introduced an intelligence-led policing approach to enforcement, but the real step-change was the creation of specific powers around licensing for labour suppliers.

Without an extension to that licensing system, or a significant increase in resources and inspectors commensurate with its new remit, there is a risk that the new economy-wide labour inspectorate will struggle to go beyond a small number of high-profile operations in high-risk sectors. This will be more akin to the broken system the GLA was designed to replace.

This Thursday 30th June 2016 the IER is participating in an event being held at Congress House to discuss these issues as part of a series on modern slavery run by the FLMG (Forced Labour Monitoring Group) and funded by the JRF (Joseph Rowntree Foundation) as part of their Forced Labour Programme. Participants will include representatives from government, unions, employers and NGOs.