Leading article: We must resist the temptation to resort to protectionism

What the oil refinery protesters are demanding is not an option
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The Independent Online

You could hardly wish for a more graphic illustration of the pluses and minuses of globalisation, and here it is in our own backyard. The French multinational Total is building a new unit for the Lindsey oil refinery in Lincolnshire, and employing Italian and Portuguese workers to help to build it.

Trade unions argue that unemployed workers living locally had the skills and should have had the chance to compete for the jobs. A protest strike began four days ago and yesterday spread across the country. The Prime Minister's party conference call for the creation of "British jobs for British workers" was a constant, and malign, refrain.

In theory, the rights and wrongs are clear. In setting up the refinery, Total was a welcome investor, providing employment in a part of the country where it was needed. If, as it appears, the construction contract was put out to tender and won fair and square by an Italian company – which brings its own workforce as part of the deal – this is quite legal. Nor does there seem to be any undercutting of British workers' wages.

Even if they were not being paid the same as British workers, however, it would be hard to fault the arrangements. Britain is part of the single European market. It opened up its labour market to mobile European Union labour when required to do so, and more generously than many other EU countries. Restrictions still apply to workers from Romania and Bulgaria, but all other EU citizens may work here – whether they come under their own steam or, as in this case, as part of a contracted workforce.

You can debate the Government's motives here: was our open labour market primarily a matter of legality and fairness, or was it also an opportunity to keep tax revenues up and inflation down? Whatever the thinking, the result was that hundreds of thousands of EU workers found work in Britain – to our benefit, and their own.

The reality, however, is more complicated than the principle. There was always a downside to the free movement of labour, in the form of depressed wages in some sectors and fewer vacant jobs. So long as those who lost out were mainly unskilled workers, unwilling or unequipped to fill vacancies, public awareness and sympathy were limited. But with the downturn – which only threatens to become worse – skilled manufacturing and white-collar jobs are being lost. In such circumstances, the arrival of the foreign workers at the Lincolnshire refinery was bound to provoke discontent.

What is more, labour legislation in Britain, and the prevalence of agency recruitment – aspects of the flexibility that made this country attractive to outside investors – can also work to our disadvantage when economic figures move the wrong way. It is simpler for companies to shed labour and withdraw their money than it is in many other European countries. The competitiveness that contributed so much to our economic boom brings with it vulnerability.

Nor is it realistic to talk about "getting on your bike". While Britain may be especially affected by recession, all European countries have been hit. Even export-led economies, such as Germany's, are suffering; rising unemployment precipitated strikes which brought France to a halt by strikes on Thursday. Rates of growth in the Baltic states, once the poster-children of the free market, are falling sharply, fuelling street protests.

And the knee-jerk response everywhere is the one being demanded by the protesters in Lincolnshire: preferential treatment for nationals – protectionism by any other name. It is one that, regrettably, appears to form part of President Obama's economic stimulus package for the United States, although the World Trade Organisation may have something to say about it. It also finds expression in new trade tariffs levied by India and Russia.

Fortunately, at least as far as the European Union is concerned, national protection for jobs and exports is not an option. While some countries may try to bend the rules in their favour, the single market makes resort to overt protectionism difficult. In this respect, Gordon Brown's call to create British jobs for British workers was not only ill-advised, but of dubious legality.

True, as the crisis has unfolded, Mr Brown has struck a different tone. At the World Economic Forum in Davos he appealed for global unity to tackle the crisis. And a common approach is the only one that has any hope of succeeding. Among the growing number of anxious workers, though, the damage has been done. "British jobs for British workers" is a catchy phrase with ready appeal. An alibi and a clarion call to labour market xenophobia, it was an easy crowd-pleaser the Prime Minister will surely come to regret.