By Professor Tony Dobbins, Professor of Work and Employment Relations
President of the British Universities Industrial Relations Association
All too often, the rules of the game of corporate governance, as currently configured, reward irresponsible business
The decision by P&O Ferries to sack 800 workers without notice and replace them with low-cost agency crew has attracted extensive negative publicity, media coverage, and uncertainty about what can be done about it, if anything. The topic of P&O Ferries and Employment Rights was debated in the UK Parliament on 21 March 2022.
The P&O case opens a pandora’s box of issues, including if a legitimate collective redundancy situation exists given jobs are not being made redundant (unionised workers on average pay of £36,000 replaced by cheaper agency labour). Reportedly, new workers can expect to earn £5.50 per hour on average under company proposals, and UK minimum wage rates at best if the government can secure this. [1]
Moreover, P&O management brazenly admitted that they chose not to consult union representatives prior to the decision being made (workers were notified of dismissal on 17th March in a pre-recorded video message), having decided to price in the cost of any penalties (unfair dismissals, for example) into their fait accompli package. This raises the question – are fines (and enforcement) robust enough to deter breaches of employment law? Apparently not. A low-cost employment model also raises questions about health and safety standards on ferries.
Bigger picture
It is vital to unpick the bigger picture of the P&O case, beyond considering the company in isolation from broader systemic forces unleashed by liberalisation of global capitalism and competition for low-cost profit maximisation.
Regarding seafaring specifically, seafarers do have some protections under EU law[2], notably a EU seafarers Directive ((EU) 2015/1794 ), but there are limits to this. Company ownership often resides overseas – P&O Ferries is now owned by DP World from Dubai, itself owned by the government of the UAE. Ferry companies are also reflagging their vessels in countries like Cyprus, the Bahamas and Bermuda, often with less onerous regulatory requirements.
Therefore, while P&O has opened itself up to understandable emotive accusations such as ‘corporate thuggery’, with associated reputational damage, we need to grasp how contemporary deregulated capitalism increasingly encourages what work sociologists might call extreme employer misbehaviour. All too often, the rules of the game of corporate governance, as currently configured, reward irresponsible business – permissiveness of low-cost competition fuels a race to the bottom in working conditions, undercutting responsible business and good employers, and setting an unlevel playing field. Why don’t responsible employers kick up more of a fuss?
P&O provides a ‘real world’ case study of the dark side of working life for students and the public, enabling better understanding of the links between workplace employment practices and how they are shaped by economic forces and power relations beyond.
Irish Ferries parallels
P&O is not the first employer to engage in this type of social dumping, even within the ferries sector. When I was a journalist in Ireland at Industrial Relations News, I reported on the bitter dispute at Irish Ferries back in 2005. Irish Ferries dismissed over 500 unionised crew and replaced them with agency workers from Eastern Europe on inferior pay and conditions. A negotiated settlement was eventually reached under the auspices of the national social partnership framework in Ireland at the time. Part of the settlement was enactment of a new Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act, 2007, providing stronger protections against collective dismissals and redundancies. The Irish Ferries dispute has attracted little attention in the British media but is worth revisiting.
One-sided flexibility: fire and rehire
The role of the state matters hugely in (de)regulating employment standards. In the UK, there has been an increase in controversial employer fire and rehire practices. But the government has not yet introduced measures to ban fire and rehire. Furthermore, the Financial Times recently reported that proposed measures on good work in the Employment Bill have been postponed. The UK has long been known for its flexible labour market. But flexibility is arguably too one-sided and a euphemism for a lighter-touch (weaker) employment rights and enforcement regime compared to many other European countries.
The UK is a small piece in a much larger global regulatory puzzle – how can global capitalism be regulated? Even the European Union can only regulate for social and employment rights in the EU area. The bigger ‘wicked problem’ is that global employment standards require stronger global regulation to constrain irresponsible behaviour by those footloose global capitalists who appear to have limited moral responsibility (their objective is profit maximisation, whatever the social costs).
The challenges of global regulation of seafarers working conditions are a case in point, as the International Transport Workers’ Federation attest.
Finally, there is also the role of customers under globalised consumer capitalism, which can work in contradictory ways. While many consumers are more aware of brand ethics and corporate social responsibility, many others demand low prices with knock-on effects for low-cost employment models exploiting cheap labour, and devastation of the environment.
[1] Employees of ferry services were apparently inexplicably excluded from a 2020 law extending the minimum wage to seafarers.
[2] UK workers are still covered by pre-existing EU employment directives, for now, post-Brexit.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.