Major hails Hoover's move as part of trend: The Social Chapter aimed to eliminate competitive advantages of cheaper labour. Britain's opt-out has caused anger in France. Sarah Lambert reports from Brussels and Julian Nundy from Paris

Click to follow
The Independent Online
THE FRENCH government said yesterday it would fight Hoover's decision to close its factory in Dijon and switch production to Scotland. The ambassador to the EC was instructed to look into accusations of unfair competition.

But there is very little the EC Commission can do. 'Social dumping', locating industry where labour costs are cheapest, is not covered by legislation.

Some French commentators accuse Britain of benefiting from refusing to sign the Maastricht Social Chapter guaranteeing workers' rights, while gaining EC aid to industry.

Although the government has accepted Hoover did not benefit from direct EC aid to Scotland, the Prime Minister, Pierre Beregovoy, blamed 'savage liberalism' - Thatcherite economics - and condemned the practice of 'robbing Peter to pay Paul'.

The Socialist government is trailing badly in the opinion polls and rising unemployment is expected to be a major issue in March parliamentary elections.

The Burgundy region is to ask Brussels for aid to retrain the 700 employees made redundant. Hoover's move to concentrate production in Cambuslang, near Glasgow, will create 400 jobs at the plant which has a workforce of about 1,000.

The Social Chapter was conceived in the same spirit as the single market. By guaranteeing similar working conditions and setting a minimum wage, the competitive advantages of cheap labour could be eliminated. But the plan has been repeatedly watered down.

Britain led the pack, the Government's philosophical objection reaching its apogee in the opt-out from the Social Chapter of the Maastricht treaty. Britain and Italy are also outside the ERM, whose fixed exchange rates were supposed to provide a level economic playing field.

Hoover said yesterday that cost had been only one factor in its decision. 'We considered distribution, and space as well as the calibre and cost of the workforce. The Scottish Office, Glasgow Development Agency and Strathclyde Enterprise Council all put up financial incentives, but so did their French counterparts.'

John Major last night cited Hoover as evidence of a pattern of inward investment, which was not surprising. 'Our productivity has been rising fast - and industrial relations have been transformed. The number of days lost from strikes has dropped to record low levels. We've abolished the closed shop, we've outlawed secondary action.'

Gillian Shephard, Secretary of State for Employment, told Tynemouth Tories that jobs came from low interest rates, low inflation, low taxes and high productivity. She also cited the jobs that would be lost from the Social Chapter.

When the opt-out was attacked by Neil Kinnock in 1991, Mr Major said the then Labour leader's view that it would deter investment was not shared by Jacques Delors, EC President, who had said: 'Britain will become a paradise for Japanese investment'.