The Working Time Directive: When opt-out is the right option

Feb 10 2009 By Steven Duncan for The Journal

 At the end of last year, Britain took a step closer to being forced to limit the working week to 48 hours for all employees when Euro MPs voted in favour of ending our hard fought for opt-out from the EU’s controversial Working Time Directive (WTD).

Steven Duncan, human resources consultant at Gosforth training company Macnaughton McGregor, looks at the possible implications for business.

IT appears that Britain remains determined to retain its right to opt-out from the WTD but if we were forced to accept it, a 48 hour working week could be a reality for all us in just three years’ time.

While some people, including the leader of Labour’s MEPs who voted to keep the opt-out, believe the UK and Brussels are so far apart on the matter that the latest round of ‘conciliation’ talks can only end in stalemate, there are others, notably pressure groups like Open Europe - which campaigns to retain the opt-out - who belief there’s a chance we could be overruled, as we have has been previously on the issue of junior doctors’ hours.

The widely held view is that the adoption of the Working Time Directive in 2011 – as some MEPs want it - will have devastating repercussions for British business, affecting in particular the competiveness of SMEs and costing the UK economy billions in lost production and adding yet another layer of unwanted red tape.

The shadow business secretary Alan Duncan has been quoted as saying that ‘reducing the flexibility of our labour market going into what even government ministers are calling the deepest recession we have ever faced, is…economic madness’. Losing the opt-out could cost the UK economy between £47.4bn and £66.45bn by 2020, while the CBI says stopping people being able to choose to work more than 48 hours a week would ‘replace opportunity with obstruction’.

Moreover, if somebody loses their job, why should Brussels stop them from working overtime to support their family? Surely, such an approach can only be unfair, unproductive and potentially socially divisive?

Where business has to rely on staff working longer than 48 hours-a-week (for example, the construction industry, manned security guarding and the hospitality trades where putting in long hours is normal practice) changing the law will have a severe impact on the staff, wages and morale. Currently, if an employee earning a salary close to the minimum wage of £5.73 per hour chooses to work extra hours to boost his or her earnings then under existing legislation they can do so.

Many companies take the view that it is more cost effective to employ a core number of staff and to balance out the working week’s peaks and troughs by asking people to be flexible when it comes overtime or reducing their hours. This ready supply of additional hours can be turned on and off like a tap and makes the company far more responsive to customer demands and short notice requirements, as well as avoiding costly training time for new employees.

By removing this ability to offer overtime to staff above a threshold - proposed to be 48 hours a week in the UK but which, in reality, is closer to 35 - 38 hours across the rest of Europe - will reduce or eliminate this as an effective strategy for competitive advantage and responsiveness for businesses.

It can only herald a reduction in customer service levels and stymieing a company’s ability to add much needed value in an increasingly tough and very competitive global market place.

The only way to respond to short notice increases in demand will be to bring in additional labour (or temporary staff), who will be unfamiliar with the company’s workings and will take days, if not weeks, to get up to speed and become productive. This is currently the method in European manufacturing where weekend overtime is a rare feature and peaks in demands take weeks to produce.

When prestigious national projects like the rebuilding of Wembley Stadium or the new London 2012 Olympic Stadium fall behind schedule they will likely drop further and further behind and could result in not only embarrassing delays but prohibitive penalties being invoked.

For those on low wages working in unskilled or manual jobs like agriculture, cleaning or labouring, the opportunity to boost their wage packets through overtime is paramount and, if this is denied, may cause many to look elsewhere for work at a higher rate of pay. This will leave behind a jobs’ vacuum that will be filled by migrant workers from overseas countries prepared to fulfill these roles. We will then see the emergence of an ‘underclass’ of workers similar to the Hispanic/Mexican population currently labouring in low paid jobs in the USA.

The outcome is a two-tier society, where jobs stigmatised as ‘no-hopers’ like the ‘McJob’ scandal, which so damaged McDonalds reputation last year, will undermine the Britain’s economy and potential for real long term growth.

But if Britain is forced to adopt the WDT, will the overnight removal of the ingrained long hours work culture act as a wake-up call that will encourage businesses to look at smarter ways of working? Or is it another nail in the coffin of British competitiveness and our position as a leading nation.

Surely, we don’t need – or want – a return of the Luddites, where new working practices and thinking are scorned and business’s ability to be flexible, responsive and efficient stymied? I for one hope not and look forward to Britain continuing its strong tradition of defying the Eurocrats with an emphatic NON! to the Working Time Directive.