UK: LURE OF LOW-WAGE WORKERS. - Wage costs no longer loom as large in manufacturing industry as they once did. Nevertheless they are still a hugely important element in the cost structure of any business. Over most of the world, indeed, low wage rates ar

Last Updated: 31 Aug 2010

Wage costs no longer loom as large in manufacturing industry as they once did. Nevertheless they are still a hugely important element in the cost structure of any business. Over most of the world, indeed, low wage rates are among the principal magnets for investment. But is there any way that a company can take advantage of low wages without shifting its operations to, say, China?

Meridian Ferries thought it had an answer to this question. Meridian, it will be remembered, took on 130 Polish seamen to crew two ships plying between Folkestone and Boulogne. The company was legally able to employ the Poles because they were contracted as merchant seamen, and - since they lived on board the ships in Boulogne harbour - did not require work permits from the French or British authorities. However Meridian reckoned without the unions. Protests by French sailors culminated in a rocket attack on the Spirit of Independence on 8 March. Two weeks later the company was in liquidation - driven under, in part, by the cost of the dispute.

The east European crews had been recruited via Poleservice, a former state-owned organisation headquartered in Warsaw. Pole-service, according to its director Zdzislaw Jakubczak, 'has established long-term co-operation with at least 15 shipowners from western Europe'. It provides 'personnel consulting services' in other fields, too, including 'medical, technical and business management'. Aside from seamen, most of these placements are made in developing countries, precisely because of the difficulty of obtaining work permits, and union opposition, in the West. Britain's Department of Employment will normally grant work permits to non-European Economic Area nationals only if they are graduates or highly skilled staff.

Arranging a work permit on behalf of a foreigner is no simple matter. The employer must first provide evidence that the post has been advertised in Britain, and that four weeks have passed without any response from suitably qualified EEA residents. Even after an application has been made, it will be a further six or eight weeks before the employer knows whether this has been successful. However no advertisement need be placed - and very little documentation is required - where a company simply wants to transfer to the UK staff that is already employed in a foreign subsidiary. Thus it might in theory be possible to set up a company in, say, Gdansk, and funnel a stream of Poles into Britain on the pretext of training and skills transfer.

However, in all cases involving 'corporate transferees', the employer would be required by the DoE to reveal their salaries. 'I think the likelihood of companies bringing non-EEA people into Britain on corporate transfer just to pay them low wages is remote - though I'm not saying it never happens,' says Dr John Salt, head of the migration research unit at University College, London. The 'biggest loophole', he adds,'is created by people who come to Britain and then find work illegally. But there is no way of knowing how many of these people there are.' According to the latest Labour Force Survey - the only official source of data on the nationality of people living and working in Britain - there were, at the last count, some 22,000 people from eastern Europe and the former Soviet Union working in the UK. However this figure derives from a survey of 60,000 households which leaves respondents free to define their nationality for themselves. An official at the DoE comments that it is 'not conceivable' that there should be 22,000 east Europeans on short-term work permits. 'We are of the opinion', he confides, 'that this survey is picking up naturalised UK citizens who still regard themselves as being east European nationals, like the Poles who settled in Britain after World War II.'

Maybe the dispute at Meridian is a sign of things to come, as and when the European Union expands eastwards. But up to now, labour mobility between high and low wage economies within the EU has remained at a surprisingly low level.

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