The European Social Chapter deals with the social policy and the rights of workers. It is the 1991 chapter of Maastricht Treaty. It was agreed on by 11 members of the 12 member states of the European Union (initially known as European Community), and the chapter required the member states to have universal social policies. The chapter covered provisions in various areas including health conditions and safety at the work place, employment conditions, working conditions for both temporary and part-time workers, the treatment and conditions for immigrant workers, collective bargaining through trade unions, gender equality, constant consultation and participation of both the employer and the employee, the protection of disabled workers, the freedom of movement within the member states, social security and minimum pension rights, a working age of 16 on the minimum, rights for professional training, maximum weekly working hours and equitable remuneration.
According to the UK government, the chapter would increase rigidities in the labour market and thus harming the economy. This is what made Margaret Thatcher, the British prime minister not to sign the chapter in 1991; however, the Labour government of Tony Blair signed it in 1997. The social chapter had various impacts on the UK businesses, some of which are highlighted hereunder.
The establishment of the European Workers Council in 1994 ensured moderations on the business structures; the economic and financial situations; most likely business developments, productions, and sales; employment trends; investments; organizational changes; working methods and new production processes; transfer of production, cut-backs and mergers; and collective redundancies. According to the UK government, these directives were costly to the UK business (COM 97-60 final, 1997). Also, 96% of the UK businesses would be exempt (DTI Press Notice, 5 October 1995) and the public finances would be adversely affected. Above all, there would be an increase in the cost of public sector employers resulting in a reduction in competitiveness and flexibility of British business thus, jobs would be lost and at the same time tax revenue reduced (Forth, 1995). The provisions of the social chapter continuously affected the British companies which do business with the rest of Europe despite the British opt-out. This brought the realization that Britain needed to participate fully to ensure that the modern competitive economy requirements are met.
Even though the chapter has numerous negative impacts to the UK business as stated above, many argue that it is beneficial. The trade unions and the Labour party believe that the chapter has resulted into a well-motivated and secure workforce which has greatly improved the productivity and at the same time enhanced competitiveness. This group believes that the standard provisions in the social chapter are civilized and greatly enhances efficiency and competitiveness. They also believe that opting out would lead to exploitation and injustice which are the greatest enemy of business efficiency and competitiveness. With the introduction of a common currency and the freedom of movement, various international co-operations within EU find it easy to operate within the region and take the advantage of the available resources.
Various opinions have been made regarding the impacts of the social chapter to the UK business, most of which are negative. Various individuals and the parties concerned believe that the social chapter has done more harm than good, and has lowered the development pace in the region. The best solution, according to this group, is to opt out of the chapter. According to the Conservative Party Economic Competitiveness Review of August 2007, opting out of the EU Social Chapter would save UK business a total of £14 billion a year. However, it is not easy, as it may seem, for UK to opt out since all the other member states must be in agreement. Be that as it may, the social chapter has improved the security of the workforce and has greatly enhanced productivity, competitiveness and efficiency.
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