Brothers united on the euro

Britain's unions have performed a spectacular turnaround on the single currency. Barrie Clement reports
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The Independent Online
THE Trades Union Congress seems to have transformed itself from traditional carthorse into festive turkey.

By registering its enthusiasm for Europe - particularly the euro - the panjandrums of the British trade union movement may well be voting for Christmas, certainly in the short term.

Exposing British workers to comparison with wage rates on the continent is a high-risk business. While workers might care to compare the pay of skilled engineering workers in the Midlands with the higher wages of their colleagues in Germany, employers will be keen to contrast the remuneration of electricians in the south-east of England with the relative pittance received by their poor cousins in southern Italy.

The TUC's conversion to the attractions of Europe was sudden. It changed from implacable europhobe to enthusiastic europhile in September 1985 when Jacques Delors, French socialist president of the European Commission, was welcomed to the annual TUC conference as "Freres Jacques".

The union movement seems to have seamlessly transferred its enthusiasm for the social dimension of Europe - a sentiment that emerged amid the Thatch-erite nuclear winter - into backing for the euro.

Cosying up to the idea of European social partnership is one thing, endorsing the single currency with all its attendant rigours is quite another.

It was a point not lost on the delegates to a conference in Cardiff this weekend organised by Euro-FIET, which has brought together workers' representatives from the finance and service sectors from all over Europe. A paper prepared for the meeting warned of "wage-dumping" and "cut-throat" competition for employment, amid a threat to 200,000 jobs in the finance sector. Unions should act in concert to create a "social Europe" built on proper labour laws and collective bargaining, the paper said.

Britain will begin to feel the impact of the euro soon - despite its decision to watch the first act of the drama from the wings. Indeed there are already signs that the single currency is having an impact.

Take the imbroglio over the future of Vauxhall's car plant at Luton. Management has made it clear that the future of the works is uncertain. General Motors, Vauxhall's parent company, seems to be dangling the vague prospect of long-term investment before workers - in return for wage restraint and measures to improve productivity.

Management at the US company's Detroit headquarters will point to the decision of German unions to cut wages and acquiesce over redundancies as a quid pro quo for long-term investment.

Tony Woodley, chief union negotiator at Vauxhall, has laid into management for its refusal to give him assurances about the Luton plant. He has hinted, however, that should they come up with the possibility of a project, he might be prepared to consider a deal on wage restraint and productivity.

While German unions may have been forced to take the decision simply to attract investment, they also appreciate that the move to a single currency will expose their high wage rates. Mr Woodley is aware of the dangers for wage rates in the UK.

The move towards the creation of the single currency gathered pace last week. On Wednesday, the European Commission cleared the way for 11 countries to join the single currency in 1999 and eased the path for eventual British membership. The Commission drop- ped its insistence that the UK would have to rejoin the Exchange Rate Mechanism for two years as a precursor to adopting the single currency. Yves-Thi-bault de Silguy, the Comissioner for Monetary Affairs, confirm- ed that membership of ERM was required but did not specify for how long.

Clearly the UK is being invited in but, even while it remains outside the single currency will have a big impact on wages in Britain. The fact that some of the 11 euro countries only made the convergence criteria through creative accounting will make matters worse for the UK.

A strong pound and a weak euro will make British wages even more uncompetitive than they are now. Sterling is already a sought-after currency. Even with the UK outside the single currency, it will be much easier to compare British wages with those on the continent.

Unions in the UK believe it is inevitable that Britain will join the system eventually. That view has been reinforced by aides to Gordon Brown, the Chancellor of the Exchequer.

Mr Brown's advisers point to the fact that some firms in the private sector are already engaged in a softening-up exercise so that Britons will become used to the euro. Marks and Spencer is converting tills at its stores to accept the euro, and Siemens has registered its determination to pay its British workers in euros - which their banks will then have to convert into sterling.

Inside the system of course, the transparency of wage rates will be complete. The Confederation of British Industry argues that employees' representatives in this country will have to abandon their "inflation-plus" mentality to wages.

Despite the trend towards performance-related pay, union negotiators in this country will consider they have failed unless they are able to hammer out a deal that allows their members not only to keep pace with inflation but exceed it.

Research group Incomes Data Services points out that in the Netherlands and even in Italy in recent years, employees' leaders have adopted a self- denying ordinance in order to ensure jobs are not lost.

Theoretically, the euro will mean that unskilled British workers will face the biggest problems, while those with sought-after skills will be able to move from country to country selling their services to the highest bidder.

But is it all gloom and doom for the wages and conditions of most British workers?

The CBI is sceptical about the possibility of high-flyers zooming around the continent playing one employer off against another. Labour mobility is notoriously low within Europe.

David Lea, assistant general secretary of the TUC, contends that the only long-term guarantee of decent wages is a strong economy. He and his colleagues at Congress House believe that while there may be some short term "adjustments" of wage rates in some industries and sectors, Britain needs to adopt the euro to ensure the country's long-term economic health.

Unions in Britain are developing strong links with their continental counterparts to ensure that collective strength is not dissipated through cross-border competition to bid down wages.

The GMB general union, one of the few TUC affiliates with an office in Brussels, has spent the last few years forming alliances with similar organisations on the continent.

John Edmonds, general secretary of the GMB, says there was no question of his union entering destructive competition with other European unions, leading to worsening pay and conditions among his members.

"We are not going to lay back and be ravished by the euro. There are opportunities and there are pitfalls, but we intend that working people will get their fair share of the benefits."

In the longer term, Roger Lyons, leader of the MSF white collar and technical union, envisages pan-European bargaining structures but concedes that such a development is still some years away. Nevertheless prog- ress is being made to prevent one country under-cutting another on wages and conditions.

Mr Lyons said that the European Metalworkers' Federation (EMF) was about to reach agreement on limiting hours. The MSF leader, who is on the executive of the federation, said that German union IG Metall had managed to negotiate a 35-hour week and that France and Italy were moving towards that target. Mr Lyons said that members of EMF were trying to reach a deal whereby all European workers affiliated to the federation would refuse to work longer than a set number of hours over a year, thus preventing one country from undercutting another.

Partly because they are democratic institutions, unions are notoriously slow in reacting to changing circumstances. In the short term therefore, cost-conscious companies detect all kinds of opportunities.

When business leaders talk of the wage flexibility they need to make the euro work, unions are aware that they are not talking about higher pay.