Embargo: 00:01 Wednesday 27 June 2007

Contact: Owen Williams 020 7219 8659


The House of Lords European Union Committee have today published a report arguing Britain should not sign up to any new proposals for extended European labour laws as proposed in the European Commission's Green Paper Modernising Labour Law to Meet the Challenges of the 21st Century.

The Committee's report comes just a few days after agreement at last week's EU summit to the new European Union amending treaty, which may have implications for labour law.

The Committee argue that the relatively light regulation of the UK labour market has been advantageous in allowing a flexibility of employment arrangements which has benefited the UK economy. As a result, the UK has avoided the high unemployment and labour segmentation witnessed in some EU member states.

The Committee takes the view that, where problems of social disadvantage and structural unemployment do exist in the UK, they need to be addressed by measures aimed at tackling low skills and social inequality, and by enforcing existing labour law when this is being flouted, rather than by changes to labour law.

The Committee find that, whatever the overall success of the economy, there remains a major problem for the UK in relation to labour productivity. They argue that changes to labour laws can only have a marginal effect in this area and conclude that to improve the UK's labour productivity the Governments priorities should be:

  • to raise the level of investment in physical capital and research and development;

  • to improve skills at all levels;

  • to assist in the innovation process; and

  • to improve the standard of people management and workplace career development.

The Committee express the opinion that the European Commission's current social partnership arrangements for consulting on legislation have too much a "two sides of industry" feel. They recommend that the Government should support the improvement of the consultation process to ensure that the views of small businesses are taken into account more fully.

Commenting, Baroness Thomas of Walliswood, Chairman of the Committee, said:

"The UK economy has been relatively successful in recent years at creating jobs and allowing flexibility in the labour market. We are concerned to see that is not undermined by overly proscriptive EU legislation."

"Rather than agreeing to increased EU regulation the Government should be focusing on areas where the UK labour market could be improved. Tackling low skills and social inequality should be the Governments priorities, not changing labour law."

"Britain's labour productivity could certainly be improved and we would like to see the Government doing more to achieve that. EU members would do better to share best practice on increasing the competitiveness of their labour markets rather than seek to legislate on this issue."

Notes to Editors

1. The report Modernising European Union labour law: has the UK anything to gain? is published by The Stationery Office, House of Lords European Union Sub-Committee G, 22nd Report of 2006/07, HL paper 120.

2. The report will be available online shortly after publication at:

3. The members of the Committee who conducted the inquiry were:

Baroness Thomas of Walliswood (Chairman)

Earl of Dundee

Baroness Gale

Baroness Greengross

Baroness Howarth of Breckland

Baroness Morgan of Huyton

Lord Moser

Baroness Neuberger

Lord Trefgarne

Baroness Uddin

Lord Wade of Chorlton