Leading Article: Sick man of Europe

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Once upon a time, the British earned their living in the world by doing things better than other people. Now, they pay their way only by doing things cheaper. According to estimates from the US Department of Labor, UK hourly wage rates are 18 per cent lower than in France, 30 per cent lower than in Holland, 42 per cent lower than in Germany. Pension, redundancy and sickness benefits are also substantially lower. According to the International Labour Organisation, the British work longer average hours and enjoy less job security. Further, the UK is the only EC country that sets neither a maximum working week nor a minimum holiday entitlement.

This is what the 'economic miracle' of the 1980s amounts to. Not a highly trained or skilled workforce, not a country leading the world in 'sunrise industries' (remember those?), not a people of vigorous innovation; just a discount supermarket on Europe's fringes. Ministers are so fearful of jeopardising this modest achievement that they will stake their futures and the future of Europe on stopping the Social Chapter. This chapter - contained in a protocol to the Maastricht treaty signed by every EC nation except Britain - may, as ministers see it, put restrictions on the use of labour. And now the oil is running out and our training effort has fallen hopelessly behind the rest of the world and our research and development have dwindled, cheap labour is our only significant natural resource. Britain has nothing to offer except sweat and toil, plus a few drops of blood and tears, without even a Winston Churchill to raise the spirits.

Perhaps John Major is right about the Social Chapter and about the need to oppose Labour's amendment 27 which is intended (though whether it would have this effect is another matter) to restore the chapter to the main treaty. Perhaps Britain's competitive advantages are so fragile that, alone in Europe, we would be ruined by, to quote one sub-clause from the chapter, 'the promotion of improved living and working conditions'. But this is not something of which Mr Major, after 14 years of Tory government, should be proud. There is something pathetic about a Prime Minister who claims as his greatest triumph an opt-out from an international treaty offering employment protection rights.

One suspects, all the same, that the Government's anxiety to stay out of the Social Chapter has more to do with ideology than with practical economics. The chapter is an enabling document, allowing the EC to make laws by agreement of member countries. It commits the signatories to nothing, except equal pay for men and women, to which the British government is supposedly already committed. It is hedged with qualifications and safeguards. It specifically excludes pay rates and the right to strike. It does cover social security and redundancy payments but directives on these mattters can be imposed only by unanimous vote; in other words, Britain would have a veto. Other sections - decided by majority vote - cover such matters as working conditions, health and safety and workers' rights to consultation. The chapter, however, warns against imposing constraints on small- and medium-sized businesses. In finding all this a threat to liberty and prosperity, Britain's Tories stand alone in Europe with Jean-Marie Le Pen's National Front.

Tory ministers seem incapable of grasping the logic of Europe. In a free-market area, multinational employers will gravitate to where costs are lowest. If EC states cannot agree on minimum standards of environmental, social, consumer and employment protection, companies will force them to compete with each other to lower standards and thus beggar their citizens. If Britain stays out out of the Social Chapter, there are only two possible results. One is that a company or union goes to the European courts claiming unfair competition; the courts might then decide that Britain was bound by European laws it had been powerless to influence. The second is that the other 11 abandon attempts at social legislation and lower their employment conditions closer to British levels. Either way, the 'game, set and match' that John Major claimed at Maastricht will be exposed as the hollow victory it was.