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					"Temporary migrant workers and the UK’s flexible labour market: shifting policy narratives
                             and regulatory rebalancing"

                                         Dr Sam Scott
                       Department of Geography, University of Liverpool, UK
                                  (sam.scott@liverpool.ac.uk)




ABSTRACT
Since 1997 an estimated 1.1 million migrants have entered the UK, with a significant
proportion filling vacancies in low-status occupations doing ‘dangerous, demanding, and
dirty’ work. Much of this work is temporary; with migrants finding employment through
highly fragmented and localised networks of employment agencies (the UK has one of the
largest but most fragmented agency sectors in Europe). This paper considers how migration
policy narratives have shifted and how the location of labour market regulation has changed
in light of the above. In the first part of the paper we discuss two shifts: 1) the managed
economic migration policy of the Home Office (which re-legitimated low-status labour
migration into the UK from around 2000); and 2) the geographical specificity of this policy
(which legitimated low-status migrants from within the EU). These shifts were part of a
political-economic consensus involving an acceptance of the need for low-status temporary
migrant workers in the UK to: ensure competitiveness; increase labour market flexibility;
control inflation; and underpin economic growth. The consensus effectively legitimated a new
range of pro-migration policy narratives, which in turn impacted upon the regulation of
migration. In the second part of the paper we examine the regulatory impact and argue that
there has been a symbolic if not yet substantive ‘rebalancing’. We suggest that the
government’s narrow pre-occupation with supply-side regulation (directed towards
controlling the ‘illegal migrant’) has reduced as the need for more generic demand-side
control (directed towards ‘illegal employers’ of generally, but not exclusively, temporary
migrant workers) has increased. In the third part of the paper, two regulators of agency
employment in the UK are profiled to examine this rebalancing: the Gangmasters Licensing
Authority (GLA) and the Employment Agencies Standards Inspectorate (EASI).1 The paper
concludes by examining whether or not the regulatory rebalancing is as progressive as it
might first appear and raises important questions over the extent to which the UK remains a
‘light-touch’ in terms of workplace regulation.




1
  The GLA is a ‘non-departmental public body’ (ndpb), with Defra its sponsoring department. The GLA is set to be
moved to the HSE in 2009, following the ‘Hampton Review’, which is a ndpb under the auspices of the DWP. The EASI
is based within the DTI (now BERR).

                                                                                                               1
A. Introduction
Since 1997 an estimated 1.1 million migrants have entered the UK, with a significant
proportion filling vacancies in low-status occupations doing ‘dangerous, demanding, and
dirty’ work. Much of this work is temporary; with migrants finding employment through
highly fragmented and localised networks of employment agencies. Box 1 reviews the key
characteristics of the agency sector in the UK.

The paper considers how the UK government has developed regulatory tools to protect
flexible migrant workers from unscrupulous employment agencies (also termed gangmasters,
labour market intermediaries, and labour providers). It is divided into three substantive
sections. First, we chart the shift in migration policy that over recent years has re-legitimised
low-status labour migration to the UK: we characterise this shift as a move from ‘territorial
control’ and ‘zero immigration’ to ‘economic control’ and ‘managed migration’. Second, we
chart the related change in the location of government regulation as it seeks to protects the
rights of the increasing number of legal low-status temporary migrant workers in the UK: we
characterise this as a ‘rebalancing’ of regulation from the supply-side to the demand-side.
Third, and in light of this rebalancing, we examine the operation of the two agency regulators
in the UK: the Gangmasters Licensing Authority and the Employment Agencies Standards
Inspectorate (EASI). The paper concludes by questioning the extent to which the regulatory
trends identified are genuinely progressive in the sense of undermining the long-standing
‘light-touch’ approach to workplace regulation in the UK.


                                   BOX 1: THE UK AGENCY SECTOR
    ...is the largest agency sector in Europe (EFILWC, 2006: 6)
    ...is worth an estimated £25 billion (Demos, 2007: 26-27)
    ...involves at least 13,000 companies (REC, 2006: 5).
    ...has increased four-fold in size since 1994 (Demos, 2007: 26-27)
    ...deals with 1.2 million temporary workers per week (down from a peak of 1.5 million in
    2003-04) and 700,000 permanent workers (REC, 2007)
    ...is largely based on temporary work placements: which account for 87% of business
    (REC, 2006: 4).
    ...is the largest temporary agency sector in the EU: accounting for around one-third of all
    temporary agency employment (Demos, 2007: 10)
    ...has one of the most fragmented temporary agency sectors in the EU with a significant
    proportion of small, local operators (see Figure 1) forming the bottom-end of a two-tier
    sector (Coe et al., 2007)
    ...is increasingly migrant-dominated: in the UK food industry, for example, one is now
    “...more likely to encounter a gangmaster in the UK employing Eastern and Central
    European workers, than a gangmaster employing indigenous workers (Geddes et al.,
    2007: 90). Table 1 and Figure 2 indicate the extent of this migrant worker presence within
    the UK gangmaster industry: with Polish, Portuguese and Lithuanians the three main
    nationalities
    ...has been subject historically to light-touch regulation when compared to other EU
    member states (EFILWC, 2006: 22, 27) and sits within one Europe’s freest labour markets
    (DEMOS, 2007: 10)




                                                                                               2
Figure 1: The structure of agency sectors in the EU, 2005
                                                                        Source: Adecco Institute



    300

    250

    200

    150

    100

     50

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Figure 2: The nationality of Gangmaster-supplied labour




                                                                                              3
Table 1: The nationality of Gangmaster-supplied labour
                                                                Proportion of
              Nationality of Gang Workers
                                                                Gangmasters
              Only British workers employed                     9%
              Only migrant workers employed                     23%
              Only Polish workers employed                      8%
              Some Polish workers employed                      82%
              Some Lithuanian workers employed                  45%
              Some Portuguese workers employed                  27%


B. The new (old) political-economic consensus
From the mid-1970s until the late 1990s UK migration policy narratives centred on the need
for ‘territorial control’ and ‘zero immigration’: manifest in the restrictions placed upon low-
status labour migrants during this time. There were some limited exceptions – for instance
the seasonal agricultural schemes that allowed foreign workers into the UK at times of peak
demand – but these were exceptions. The stated policy aim was simply to: “to restrict
severely the numbers coming to live permanently or to work in the United Kingdom” (Home
Office, 1994).

From the late 1990s the policy narrative shifted to one of ‘economic control’ and ‘managed
migration’. As part of this, it was recognised that the UK needed migrants to fill job vacancies
at the bottom-end of the labour market. A key Home Office report noted in 2001 that
“…there is clearly unsatisfied demand at all skill levels in the labour market” (Glover et al.,
2001: 50). This was followed in 2006 by a similar recognition when the Home Office, in a
survey of employers, noted how they now: “place considerable reliance on low-skilled
migrants” (Dench et al., 2006: vi). Reports by the Government Actuaries Department (GAD,
2004) and HM Treasury (2002) in the intervening years demonstrate the pervasiveness of this
narrative shift.

There was also a growing awareness that industry had acted faster than government on this,
and that certain low-status sectors were becoming structurally dependent on migrant
employment even if these workers were ‘illegal’. A HR Manager we interviewed at a multi-
national food processing company remembered how: “At the time (in the late 1990s) it
seemed that there were no real alternatives, and there were no real options for reputable
companies” (HR Manager, Eastern England, August 2007). The plea by the CBI that “business
needs managed migration” (CBI, 2005) reflects the groundswell of demand that built up in the
UK from the late 1990s for low-status workers.

This caused a major dilemma: the UK Home Office was facing the growing phenomenon of
‘illegal’ migrant workers and was expected to ‘control’ this problem, at the same time as UK
business was growing increasingly dependent upon migrants to perform jobs that were too
poorly paid and/ or too ‘dirty, dangerous and demanding’ for the British-born workforce.
There was, very simply, a clash between the logic of business and the long-running policy
narrative of government. What eventually emerged, as a result of this clash, was a dual
migration policy narrative of ‘territorial’ and ‘economic’ control. Government and business
came to the conclusion that ‘managed migration’ – at all skill levels – was the best solution to
address economic pressures and to tackle the growing problem of ‘illegal’ migrant work.


                                                                                              4
The government-business consensus underpinning the narrative shift had a distinct
geographical shape to it. It emerged at the same time as a long-running process of EU
enlargement was coming to fruition. In May 2004 ten new states joined the EU, with two
more becoming members in January 2007. The growth of the EU from 15 to 27 countries
effectively signalled a huge expansion in the boundaries of legal labour migration. The UK,
given the political-economic context summarised above, welcomed this expansion and the
migratory possibilities associated with it. In fact Tony Blair’s decision not to impose
transitional restrictions on the ‘A8’ countries (Poland, Estonia, Latvia, Lithuania, Czech
Republic, Slovakia, Hungary, Slovenia) was an exceptional one: only Ireland and Sweden did
likewise.2

The UK labour market, after May 1st 2004, was opened up to millions of foreign workers who
could fill the now widely-known-about vacancies in low-status sectors of the economy
(hospitality, agriculture, construction, cleaning, care-work). Tony Blair’s decision to allow free
movement of workers not only opened the door to European migrant workers (of all skill
levels), it also led to possibly the largest de-facto regularisation process the UK has ever
seen.3 Thousands of eastern European workers moved out of the informal economy overnight
to become ‘legal’ as a result of EU enlargement: between 30% and 60% of A8 migrants
recorded as entering the UK after May 2004 are believed to have already been working in the
country prior to EU enlargement (Bijak et al., 2004; Home Office, 2004). Thus, government
finally caught up with industry and in doing so was able to show it was in control of ‘illegal’
migration and also in control of the economy. These two factors are possibly the most
important issues used by voters to judge the competence of government and, with an
election looming in 2005, one can see why the migration policy narrative shifted in the way it
did and at the time it did.

The situation described above is not new. In the 1950s, 60s and early 70s there was a similar
consensus between government and business that underpinned an era of ‘mass’ European
migration: from Turkey, Yugoslavia and Greece to Germany; from the Maghreb, Spain, Italy
and Portugal to France; and from the Caribbean, Indian sub-continent and Ireland to the UK.
What is new is the workplace context that today’s migrants enter.

There is once crucial dimension of difference here that we want to identify. In the post-war
era, low-status labour migrants came to the UK and there was an expectation that they would
eventually return home. In most cases this did not happen. This same temporary expectation
has been transferred onto recent arrivals from eastern Europe. Furthermore, these arrivals
also have an additional temporary dimension: those employed in low-status occupations
generally find work through agencies and this work is temporary and/ or highly precarious.
There are, then, two temporary dimensions to contemporary labour migration to the UK
where in the past there was one. In fact, the reason migrants are so attractive to employers
at the bottom-end of the UK labour market is precisely because they can be used ‘as and
when needed’ with employment agencies vital in ensuring this flexibility.



2
  The Home office estimated prior to May 2004 that between 5,000-13,000 eastern European migrant workers would arrive in
the UK per annum.
3
  The most notable feature of the UK in this respect is that it has not, unlike many other EU member states, sought to formally
regularise so-called ‘illegal’ migrants (see: GAO, 2006) except in very particular circumstances (Levinson, 2005). There are
estimated to be over 500,000 irregular migrants (and one would assume workers: how else would these people feed and clothe
themselves?) in the UK. Although the calculations used to arrive at this estimate have been questioned (cf. Dorling, 2007; Jandl,
2004; Woodbridge, 2005), no-one would deny that there are large numbers of workers in the UK living outside formal state
institutions.

                                                                                                                               5
With post-war labour migrants the expectation was that they would only stay as long as the
economy was buoyant with contracts ‘temporary’ to serve the interests of business. John
Berger and Jean Mohr capture this in their classic text of the time ‘A Seventh Man’:
   “What distinguishes this migration from others in the past is that it is temporary. Only a
   minority of workers are permitted to settle permanently in the country to which they
   have come. Their work contracts are usually for one year, or, at the most, two. The
   migrant worker comes to sell his labour power where there is a labour shortage...It is
   not men who immigrate but machine-menders, sweepers, diggers, cement mixers,
   cleaners, drillers, etc...Governments and multi-national corporations plan their policies
   on a global scale, and the advantages for capitalism of worker migration being
   temporary are considerable” (Berger and Mohr, 1975: 58, 111)
Over three decades on, Berger and Mohr’s notion of the ‘temporary’ migrant worker now
looks relatively permanent:
   “We use 200 agency staff to top-up during busy periods with 26 languages spoken on-
   site. Now the traditional model of factory employment involved workers on a Monday
   to Friday 8am to 4pm, or 9am to 5pm contract, with the prospect of weekend over-
   time. This wasn’t efficient given when in the week our demand is greatest and we could
   never meet the demand on Sunday: which meant a back-log into the new week. To
   survive, we needed to be flexible in the way we worked and turn workers ‘on and off’ as
   quickly as the sun comes out. In our industry (salad produce) the weather drives
   demand...Demand is not just a seasonal or day of week thing, though, it is also shaped
   by the price of competitors’ products. So it’s a complex calculation and things can
   change considerably” (HR Manager, UK Salad Producer, September 2007)
Essentially, what it means to be a ‘temporary’ migrant worker has shifted a few time zones:
from years in the 1970s to days and weeks in the 2000s.

In many cases this new ‘time zone’ for temporary migrant workers has been celebrated as a
sign of flexibility and personal freedom; but for low-status workers in particular, there are
important social policy issues attached. This is where labour market regulation comes to the
fore: especially as hundreds of thousands of these workers are now legal following EU
enlargement.

In the more rigid and stable post-war era, the costs of the ebb and flow of industrial
production were met by business, but today these costs are met by the individual worker
through under- and un-employment. Employment agencies have been central in facilitating
this cost transfer and when workers are not needed they are simply not paid. The
government’s (and voluntary sector’s) role has become one of mopping up the negative
externalities that result from the efficiency savings of more flexible labour market strategies.

C. Regulatory rebalancing
Whilst the political-economic consensus underpinning the recent shift from ‘zero’ to
‘managed’ migration was evident during the post-war era of ‘mass migration’, the added
dimension of labour market flexibility – what we would term the new ‘time zone’ of the
temporary migrant worker – has important implications in terms of UK labour market
regulation. What has effectively happened is that, as policy narratives have shifted from
‘territorial control’ and ‘zero immigration’ to ‘economic control’ and ‘managed migration’,
and as large numbers of low-status ‘illegal’ workers have been replaced by low-status ‘legal’
workers following EU enlargement, the UK government has had to acknowledge the need for
a social dimensions to accompany the economic migration consensus it forged with business.




                                                                                              6
Broadly speaking, concern around vulnerable employment has increased and regulation
affecting migrant workers has undergone a ‘rebalancing’ over recent years. Government
rhetoric was once almost exclusively centred on problems of migration and involved a narrow
pre-occupation with supply-side regulation (directed towards ‘controlling’ the ‘illegal migrant’
worker). As low-status migrant labour has been legitimated, however, the need for more
generic demand-side control (directed towards ‘illegal employers’ of generally but not
exclusively migrant workers) has become apparent. The key issue the UK government now
faces is how to manage the costs and benefits of increasing flexibility (i.e. the growth in
temporary employment and low-status labour migration) and whether or not demand-side
labour market regulation has a role to play in this.

Throughout the 1980s and 1990s there was a trend towards de-regulation. This trend was
particularly pronounced in the UK and was associated with a commensurate decline in union
power. Even today, the UK is home to one of the “freest markets in Europe” (Demos, 2007:
10) and levels of unionisation in the most vulnerable sectors of the economy are at historic
lows (EFILWC, 2006: 30; Wills, 2005). Recently, however, the UK government – because of
increasing agency activity and rising levels of low-status labour migration – has been aware of
the need to ensure the basic protection of flexible workers: some have called this the start of
a ‘re-regulation’ agenda. Figure 3 characterises the long-running tension between labour
market flexibility and government regulation in the UK.

The current debates at an EU level over the ‘Temporary Agency Worker Directive’ and the
principle of ‘flexicurity’ show just how thorny the issue of labour market regulation is. At a
national level we have also seen the TUC establish a ‘Commission on Vulnerable Employment’
and the UK government establish a ‘Vulnerable Worker Enforcement Forum’. Figure 3
captures the basic regulatory dilemma in this respect, and shows very simply how the balance
between labour market flexibility and regulation/ security has shifted over recent decades.
The issue now is how much regulation to allow before flexibility is compromised and, more
importantly, how much resource, power and legislative clout governments should give to
workplace regulators following decades of ‘light-touch’ regulation.

We now turn our attention to two agency regulators in the UK: the Gangmasters Licensing
Authority (GLA) and the Employment Agencies Standards Inspectorate (EASI). The former
gained full legal powers in late 2006 and governs a limited number of industries (agricultural,
horticultural, food packing/ processing, and shellfish gathering/ processing industries). The
latter, in contrast, has a much longer history and is charged with regulating agencies across
the whole UK economy.




                                                                                              7
                                                                        LABOUR MARKET
                                                                           FLEXIBILITY
                                                                          (TEMPORY &
                                                                            MIGRANT
                                                                         EMPLOYMENT)


                                                                         REGULATORY
                                                                         ACTIVITY (BY
                                                                        GOVERNMENT &
                                                                           UNIONS)




          1970s             1980s             1990s            2000s


Figure 3: The changing balance between labour market flexibility and regulation in the UK

D. The Gangmasters Licensing Authority (GLA)
1. A brief history of the UK’s ‘Gangmaster’ system
Before examining the contemporary impact of the GLA, it is important to review the
gangmaster system that it has been set up to govern. Gangmasters represent a specific type
of employment agency. For centuries they have supplied workers on a temporary basis to the
UK food sector. In many ways gangmasters have been one of the few constants in a rapidly
changing sector.

Food in the UK has always been produced on a seasonal basis and the main variable cost in
this production process has always been labour. Further, gangmasters have been the vital
intermediary here: enabling farmers and food packers/ processors to respond both to the ebb
and flow of seasonal production, and within this seasonal ebb and flow, to the daily and
weekly vicissitudes of consumer demand. Gangmasters allow food suppliers to increase
efficiency, reducing the costs of production by allowing them to employ workers ‘as and
when needed’. This explains why they have been a constant, even if the political-economy of
the UK food industry has changed beyond all recognition.

The implementation of the Agricultural Gangs Act of 1867 and related Children’s Employment
Commission Report (see Brass, 2004) demonstrates the historic role of gangmasters in
supplying workers on a temporary basis to UK agriculture. The need for such legislation also
demonstrates the long-standing link between gangmasters and worker exploitation. Indeed,
the Union movement in the UK actually has its origins in agriculture.

Gangmasters were, and still are, extremely concentrated geographically: skewed towards the
east of England and specifically the three low-lying and very fertile fenland counties adjacent
to the Wash estuary (Lincolnshire, Cambridgeshire and Norfolk). Figure 4 shows the
contemporary distribution of the 1100+ UK gangmasters with a Gangmasters Licensing
Authority (GLA) licence. The fenland cluster (cluster 7) is the most significant in both an
historical and contemporary sense; there are also other clusters related to the geography of
the modern UK supermarket supply-chain (positioned along major arterial routes and/ or

                                                                                             8
close to large consumer centres). These clusters explain why in some areas of the UK
gangmasters, and the flexible (largely migrant) workers associated with them, are very visible,
whilst in other areas people have little knowledge of the gangmaster system of temporary
labour supply.

Until the 1950s temporary workers were supplied by local villages at harvest time with
women and children doing most of the additional work required: hence the need for the 1867
Gangs Act to protect children and women working in agriculture. Labour was also sourced
from further afield: mainly in the form of itinerant Irish workers many of whom were part of
traditional Traveller communities.

From the 1950s onwards, and especially during the 1980s and 1990s when supermarkets
were establishing their dominance over the UK food industry, demand for traditional farm-
based seasonal labour declined. This was due to a fall in the real price of food, linked to rapid
mechanisation, intensification, and the emergence of new and extremely large processing
and packaging plants to meet the demands of an increasingly sophisticated consumer market.
Figures 5 and 6 chart the decline in agricultural employment since the early 80s that has
resulted from these very tough operating conditions where only the larger, stronger and/ or
specialist higher value-added operators survive.

Alongside the decline in total agricultural employment shown in figures 5 and 6, the 1990s
also saw the emergence of local labour shortages, with many gangmasters forced to look to
new sources to fill the vacancies that arose. The declining industrial cities of Northern
England were one such source:
   “When the mining industry collapsed we used to have people coming from Sheffield in
   vans daily to work in the fields in Boston. That was where the work was. And the most
   striking thing I have seen, obviously I was younger then, but because people were used
   to mining, they would drop down on their knees to do the job, because it was more
   comfortable for the body. I was a young girl, but I thought it was quite odd *laughs+.”
   (Grower – owner)

Migrant workers were the other main source. The Portuguese were early pioneers here.
Portugal joined the EU in 1986, and until the May 2004 enlargement, was the poorest
Member State. Portuguese communities are now well established in the unlikeliest areas of
the UK – places like Boston, Grantham and Soham (see Figures 7 and 8) – because of the
vacancy chains in the UK food industry. Rogaly (2006) attributes this paradox of declining
total employment and increasing labour shortages to the “intensification of workplace
regimes” as food producers look to cut costs to survive.

Other than the Portuguese, gangmasters also supplied ‘illegal’ migrant workers during the
1990s and early 2000s. There was little government intervention at the time, businesses
needed workers, and a highly flexible, informal, gang system existed to meet this need. The
visible ‘tip of the iceberg’ (and also end of the line) with respect to this informal gang-based
system of migrant labour system was the tragic death of 23 Chinese cockle pickers on the
treacherous sands of Morecambe Bay in February 2004. This event, more than any other,
marked a realisation that employers need more substantial legal channels through which to
recruit low-status migrant workers and initiated a symbolic re-balancing of regulation
towards the demand-side (i.e. the employer/ workplace). It is also important to re-iterate
here that three-months after Morecambe Bay EU enlargement took place. This effectively
‘opened the door’ (because of the UK’s decision not to impose transitional restrictions) to
legal low-status migration from Eastern Europe. Figure 9 shows how A8 migrants, like the


                                                                                               9
Portuguese, have headed for rural areas of the UK to fill job vacancies at the bottom of the
food supply system.4

Figure 4: The Geography of UK Gangmasters




                                           Defining
    Name of Cluster                                                  Explanation
                                           Characteristics
    1. London-South East                   Urban                     Large urban area. Centre for business
                                                                     head-quarters in the UK.
    2. Birmingham-Hereford/                Rural-Urban               Large urban area with adjacent, well-
       Worcester                                                     connected agricultural hinterland.
    3. Mersey Valley/ Fylde Coast          Rural-Urban               Large urban area with adjacent, well-
                                                                     connected agricultural hinterland.
    4. Cornwall                            Rural                     Remote rural economy.

    5. M1 ‘North’                          Transport                 Axial M1 link, running adjacent to large
                                                                     urban areas and close to significant
                                                                     agricultural economy.
    6. Central Scottish Belt               Rural-Urban               Large urban area with adjacent, well-
                                                                     connected agricultural hinterland.
    7. The Wash (Lincs/ Cambs/             Rural                     Centre of the UK’s agricultural
       Norfolk)                                                      economy.



4
 The map is based on A8 WRS (Worker Registration Scheme) numbers. Migrants from the 8 countries of eastern and
central Europe that joined the EU in May 2004 (the ‘A8’ countries) must register on the Home Office managed WRS.
Figure 9 shows where in the UK these registrations are concentrated relative to the existing UK population.

                                                                                                             10
Figure 5: Agricultural Employment 1983-2006

                                              600,000



            Total agricultural labour force
                                              500,000

                                              400,000

                                              300,000

                                              200,000

                                              100,000

                                                       0
                                                             1983

                                                                      1985

                                                                               1987

                                                                                        1989

                                                                                                1991

                                                                                                        1993

                                                                                                                1995

                                                                                                                        1997

                                                                                                                               1999

                                                                                                                                      2001

                                                                                                                                             2003

                                                                                                                                                    2005
                                                                                      Source: Agricultural Census / Agricultural Survey (2006)

Figure 6: Casual Agricultural Employment 1983-2006

                                              80,000
                                              70,000
            Total casual labour




                                              60,000
                                              50,000
                                              40,000
                                              30,000
                                              20,000
                                              10,000
                                                  0
                                                           1983

                                                                    1985

                                                                             1987

                                                                                      1989

                                                                                               1991

                                                                                                       1993

                                                                                                               1995

                                                                                                                       1997

                                                                                                                               1999

                                                                                                                                      2001

                                                                                                                                             2003

                                                                                                                                                    2005




                                                                                      Source: Agricultural Census / Agricultural Survey (2006)




                                                                                                                                                           11
Figure 7: Portuguese DWP-administered National Insurance registrations (2006 per 100
Households)




                                                                                       12
Figure 8: Portuguese Community Presence in Boston, Soham and Grantham




                   The ‘Fado’ Portuguese Cafe in Boston, Lincolnshire




                The ’25 Abril’ Portuguese Cafe in Soham, Cambridgeshire




               The ‘O Cantinho’ Portuguese Cafe in Grantham, Lincolnshire




                                                                            13
Figure 9: Home Office administered WRS registrations (May 2004 – December 2006 as % of
total population)


                                                                                         14
2. The (re)turn to Gangmaster licensing
Gangmasters have been licensed in the UK on three separate occasions:
1. Following World War II as a temporary strategy (lasting until 1951) to stop the movement
    of casual workers across the country and to prevent gangmasters exploiting farmers'
    demand for labour. The logic behind it was to reduce reliance on transport/ fuel and keep
    labour (and therefore food) costs down.
2. In the Employment Agencies Act of 1973. However, the licensing conditions in this act
    were repealed in 1995.
3. From late 2006 as the powers of the Gangmasters Licensing Authority became formalised
    in UK law.
Box 2 provides a summary of the main voluntary and legislative developments in the UK with
respect to gangmaster licensing, up to and including the formation of the GLA.

The emergence of the GLA can be traced back to just two years after the repeal of the 1973
Employment Agencies Act. In 1997, because of the labour shortages identified above, a
‘Working Party on Gangmasters’ was established. Sir Richard Body (MP for Boston and
Skegness – the area of the UK with the highest level of gangmaster activity) was adamant that
a licensing scheme was needed because of businesses’ response to these shortages:
    “Gangmasters fall into two categories. The first comprises those whose names,
    addresses and telephone numbers can be found in the telephone directory. They can
    be easily identified by Government Departments and, generally speaking, they engage
    local people. They often employ their friends, relations and neighbours. They depend
    on having a good reputation, and over the years they have tried to do an honest job. If
    they were not honest to their friends and neighbours, they would not have gangs.
    However, their position has become almost untenable because of the other category
    of gangmasters who are in the vast majority, many of whom have criminal records and
    continue to commit acts of dishonesty and violence...The result is unfair competition.
    Wages are almost the only variable cost in producing and processing vegetables.
    Farms and factories that can reduce their wage costs can hold down their prices. As
    the Minister knows only too well, about five major supermarket chains are competing
    with each other and trying to keep down prices, with the result that at the end of the
    chain gangers are working at a derisory rate of pay. The position has become worse in
    the past 12 months...and I can think of no solution other than a return to licensing.”
    (House of Commons, 2004: 9-10).

The problem was basically one of new gangmasters and new sources of labour undercutting
existing operators allied with an increasingly competitive and very tough operating climate for
UK food producers (because of the costs pressures being placed upon them by a relatively
small number of large supermarkets and suppliers). Vorley (2003) very neatly characterises
this economic system:

     “(UK) Farmers have, in the perennial do-or-die drive to become lowest cost producers
    of agricultural commodities, been prepared to pay themselves and their workers less
    than the industry wage rates” (Vorley 2003: 23) This is because: “a large number of
    competitive and relatively powerless suppliers face a few large buyers. Farmers are
    playing to the rules of perfect competition while their customers are part of a complex
    monopoly” (Vorley, 2003: 10).

The 1997 working party led to ‘Operation Gangmaster’, a partnership between government
departments that was designed to address the concerns raised by Sir Richard Body, amongst
others. In the UK tradition of ‘light touch’ regulation, Operation Gangmaster involved “no

                                                                                              15
additional resource of any consequence” and was seen as “a woefully inadequate response to
the complex enforcement issues arising from the illegal activities of gangmasters” (House of
Commons, 2002-03: para. 41-45).

Interestingly, business seemed to recognise the importance of ‘heavier touch’ regulation
before government. UK supermarkets in particular realised that they could not be associated
with illegal gangmaster activity (workplace exploitation, business fraud, irregular workers)
and a voluntary code of practice for temporary labour use was established in 2000 (launched
by the ‘Fresh Produce Consortium’ industry body). Two years later the ‘Temporary Labour
Working Group’ was set up, and from this a voluntary license and inspection system emerged.
Notably, at the same time that business was self-regulating, an EFRA Committee was
beginning to gather quite damning evidence of worker exploitation in the UK food industry
(see: House of Commons, 2002-03).5

Participation in the voluntary license scheme was high amongst companies with direct links to
UK supermarkets and/ or with direct links to their main supplies. In fact, supermarkets often
insisted that their suppliers use only TLWG-accredited gangmasters. Further, the voluntary
scheme was supported by a ‘stakeholder alliance’ of business, unions, and government, via
the ‘Ethical Trading Initiative’ (ETI). The one problem with the initiative was that it was
voluntary and lacked any new legislative ‘teeth’: thus falling into the same trap as previously
unsuccessful attempts at gangmaster regulation.6

It is highly likely that gangmaster licensing would have remained voluntary and industry-led
had it not been for the tragic deaths of 23 Chinese cockle pickers on Morecambe Bay in
February 2004. Much of the rhetoric at the time of this event centred on migration and
specifically the ‘illegal’ status of the Chinese workers and the snakehead gangmasters who
‘trafficked’ them to the UK from the Fujian province in rural China. Nonetheless, there was no
escaping the fact that 23 people died on the night of February 5th 2004 and, however much
people implicitly criminalised them due to their immigration status, they were abused,
exploited and ultimately killed by negligent employers.

Morecambe Bay was a ‘defining moment’ that allowed the longer-running industry-led
TLWG/ ETI licensing to develop the necessary political impetus. To use the words of the
Labour minister John Denham: the workplace became “immigration’s real front line”
(Denham, 2006). Witness the following exchange in the House of Commons immediately after
the 23 Chinese deaths:

    John Denham MP (Labour): “My right hon. Friend said that he would use the full force
    of the law. Does he accept that the fines in prosecutions for the employment of illegal
    labour are at trivial levels?
    Alun Michael MP (Labour, Defra Minister): “There are examples bordering on the
    trivial, and I agree with my right hon. Friend on the need for concern about that. I
    believe that in a recent case a fine of about £100 was given, which clearly does not get
    across the message that the matter is taken seriously by the courts, or, indeed, by
    Parliament”(House of Commons, Morecambe Bay (Deaths) Debate, Monday February
    9th 2004)




5
 For details of the TLWG scheme see: TLWG (2007).
6
 Interestingly, 30 of the 32 GLA licences so far revoked have involved labour providers who successfully passed the
TLWG/ ETI voluntary audits.

                                                                                                                      16
The 2004 ‘Gangmasters (Licensing) Act’ that led to the establishment of the GLA was passed
on the back of Labour MP Jim Sheridan’s T&G-sponsored ‘Gangmaster (Registration) Bill
2003-04’ (the T&G is the main union in the UK covering workers in the food industry). This
was a ‘Private Members Bill’ first brought to the House of Commons in December 2003 in an
attempt to make the ETI/ TLWG voluntary licensing legally binding. It is worth noting here
that, when the Bill was first tabled in December 2003, the Government did not favour
compulsory registration for gangmasters as they did not think that this would solve any of the
problems underlying worker exploitation (House of Commons, 2004: 25-26). Crucially,
however, the Bill was granted a second reading in February 2004 shortly after the
Morecambe Bay tragedy.7 The timing was critical. Morecambe Bay led to the little-known
Private Members Bill becoming an Act of Parliament: something that only rarely happens, and
in this case it happened in almost record time.8

Gangmaster regulation must be understood in relation to these three events: the defining
moment of Morecambe Bay; the longer-running industry-led licensing scheme; and the
fortuitous passage of Jim Sheridan’s Private Member’s Bill. Together they led to the GLA and a
re-balancing of the geographical focus of regulation away from the illegal worker and towards
the illegal employer.


       BOX 2: MILESTONES IN UK GANGMASTER REGULATION (voluntary and statutory)
1867                Agricultural Gangs Act to protect children and women working in agriculture
1951                End of emergency gangmaster licensing brought in due to World War II
1973                Employment Agencies Act (led to partial gangmaster licensing)
1976                Agency Enforcement Inspectorate established by the Conduct of
                    Employment Agencies and Employment Business Regulations 1976
1995                Gangmaster licensing covered by the Employment Agencies Act repealed (by
                    the Deregulation and Contracting Out Act 1994)
1997                Interdepartmental Working Party on Gangmasters established
1998                DWP-led Operation Gangmaster (a response to the 1997 Working Party)
2000                Fresh Produce Consortium (FPC) launches voluntary code of practice for use
                    of temporary labour
2002                Temporary Labour Working Group (TLWG) established
2002-2003           EFRA ‘Gangmasters’ Committee
2003                Employment Agencies and Employment Business Regulations 1976
                    simplified to reduce costs to employers and increase flexibility. The rights of
                    workers covered by the regulations were improved
2004                Morecambe Bay Tragedy
2004                Gangmasters (Licensing) Act
2004                Association of Labour Providers (ALP) established
2005                Gangmaster Licensing Authority (GLA) established
2006                Offence of supplying and using unlicensed labour established
2007                Offence of supplying and using unlicensed labour extended to shellfish




7
  A ‘Private Member’s Bill’ can only enter the House of Commons for debate following its selection at a ballet of all
MPs.
8
  Prior to Jim Sheridan’s Private Members Bill, Mark Simmonds MP introduced a Ten Minute Rule Bill, the ‘ Licensing
and Registration of Gangmasters Bill 2002/03’ in September 2003. This made no progress, as with almost all Ten
Minute Rule Bills, but was simply designed to raise awareness of the gangmaster situation in the UK.

                                                                                                                  17
3. What has the GLA achieved?9
The key question that now emerges is whether the demand-side rebalancing of government
regulation with respect to migrant workers has had any impact: very simply, does the
licensing of gangmasters help to reduce the exploitation of migrant workers? This is an
important question given the fact that gangmaster licensing has been tried twice before in
the UK; it is also important in light of the long-standing ‘light-touch’ approach to workplace
regulation (we will say some more about this in relation to our second ‘EASI’ case-study)

The GLA has so far licensed 1,102 gangmasters in the UK (a license costs £400-£9,000 per
annum depending on turnover).10 It has 55 full-time staff – 29 employed in frontline
compliance and enforcement activities – and a £3.2 million budget.11 The GLA is supported by
a legislative base that makes it an offence to act as a gangmaster without a licence (came
into force in October 2006), and an offence to enter into arrangements with an unlicensed
gangmaster (came into force in December 2006). There are also two other criminal offences
related to: using a false license, and obstructing enforcement/ compliance activity. Further,
the 2004 Gangmasters (Licensing) Act also amends the Proceeds of Crime Act 2002 to enable
the assets of convicted gangmasters to be seized, and amends the Police & Criminal Evidence
Act 1984 to make operating without a licence and/ or possession of a false licence/ false
documentation arrestable offences.

The maximum penalties for unlicensed gangmasters are: up to 12 months in prison for
operating without a valid licence; with a two year and ten year maximum sentence for
second and third offences respectively. For those operating with a license but who are not
compliant with the law there are a number of options:
1. The GLA can grant a licence with additional conditions (with the proviso that the labour
    provider addresses additional licensing conditions (ALCs))
2. It can refuse a licence following an application inspection
3. It can revoke a licence without immediate effect (the labour provider has the right to
    appeal and can continue trading during the appeal) following a compliance inspection
4. It can revoke a licence with immediate effect (the labour provider must cease trading but
    still has the right to appeal) following a compliance inspection

The GLA is reliant on external intelligence in order to target its compliance and enforcement
activity: directed at licensed and unlicensed gangmasters respectively. For the 12-month
period November 2006 to October 2007 666 cases were opened based on this intelligence:
equating to approximately 55 cases per month, or 2.6 new cases per working day. There was
roughly the same amount of compliance cases generated from this intelligence (318) as there
were enforcement cases (273). The vast majority of this intelligence related to just two
issues: 1) low wages; and 2) the non-payment of tax. Figure 10 gives an illustration of the
former, showing how a worker on the national minimum wage (£5.52 per hour) was subject
to a litany of possible deductions as part of his contract with a UK gangmaster.

In terms of compliance:
     40% of all license applications have had ALCs attached following application inspections
     30 licence applications have been refused (2% of all licence applications up to September
     2007) following application inspections

9
  Evidence for this part of the paper is drawn from an independent evaluation of the first year of GLA operation carried
out by the University of Liverpool and University of Sheffield (Scott et al., 2007).
10
   This figure of 1,100 is quite a significant proportion of the total agency sector: which is comprised of an estimated
10,000-15,000 firms.
11
   Compliance activity refers to the regulation of licensed gangmasters to ensure that they are complying with the law.
Enforcement activity refers to the regulation of unlicensed (and therefore illegal) gangmasters.

                                                                                                                     18
    30 licences have been revoked without immediate effect following compliance
    inspections
    2 licenses have been revoked with immediate effect following compliance inspections
    30 of the 32 licence revocations have involved labour providers who successfully passed
    the voluntary TLWG/ ETI audits that operated prior to the Gangmasters (Licensing) Act
    2004
    In the first six-months of 2007 193 compliance inspections were carried out
    85% of compliance inspections involve prior warning to labour providers
    47 appeals have been brought against the GLA for its compliance decisions. Of the 38
    cases decided by October 2007, the GLA was vindicated in 32 (84%) of these

In terms of enforcement:
     96 cases of unlicensed gangmasters have been passed to the enforcement team and
     accepted for investigation with a further 13 cases self-generated
     None of these 109 cases has so far got to court and no prison sentences have yet been
     handed out
     However, seven cases are currently in progress and the first case is due in court by
     January 2008.

To put this compliance and enforcement activity in an historic context, in the 18 months
immediately prior to the landmark EFRA Committee (House of Commons, 2002-03) that
looked at the UK food industry and the issues around gangmaster labour supply within it only
13 gangmasters were prosecuted by the UK government. Further, following the deaths of 23
Chinese cockle pickers in Morecambe Bay in February 2004 it took until March 2006 (25
months) for the gangmaster responsible to be sentenced; and even then many argued that
the real perpetrators were never brought to justice.

The GLA has successfully brought over 1,100 gangmasters into the formal economy in its first
fully operational 12-months. What is vital now is that it demonstrates that it is able to ‘go
after’ and prosecute the unscrupulous (licensed and unlicensed) gangmasters that remain i.e.
that it ‘has teeth’.

Back in 2002-03 the EFRA Committee made this point about effective and sustainable
licensing requiring considerable support to ensure it is a viable mode of labour market
regulation:
    “We are not convinced that a statutory registration scheme offers a stand-alone solution
    to the problems of illegal gangmasters. Certainly, without concerted action to remedy the
    shortcomings in enforcement that we have highlighted in this Report, a statutory
    registration scheme, introduced as a single policy response, will solve nothing. It is
    difficult to imagine that those individuals engaged in the types of illegal activity about
    which we received evidence would be affected by a registration scheme unless it were
    rigorously enforced. A statutory registration scheme may prove to be necessary, but it will
    only be effective if it is introduced as part of a wide range of policy initiatives designed to
    confront the difficulties associated with the supply of temporary labour to the agriculture
    and horticulture industries (House of Commons, 2002-03: para 58).
The Committee recognised that licensing would not work within a context of ‘light touch’
enforcement. What was needed was a ‘licensing+’ approach involving “rigorous”
enforcement and “a wide range of policy initiatives” (ibid.).

Whether or not the GLA has the necessary legislative, political and industry backing to pursue
a rigorous compliance and enforcement ‘licensing+’ strategy over the coming years is an

                                                                                                 19
open question, dependent on ‘research in-progress’. It also depends on the wider
government strategy with respect to industry regulation. This is currently outlined in the
‘Hampton Review’ (2005) which identifies seven core regulatory principles. The review
appears to be very much rooted within the UK’s ‘light-touch’ regulatory tradition.




Figure 10: Gangmaster payslip deductions from minimum wage migrant workers




                                                                                        20
E. The Department for Business, Employment and Regulatory Reform’s (BERR)
   Employment Agencies Standards Inspectorate (EASI)
Whilst the GLA licenses employment agencies supplying workers to the UK food industry
(agriculture, horticulture, food packing/ processing and shellfish gathering/ processing), the
DTI (Department for Trade and Industry) is responsible for regulating the activity of UK
agencies across the economy through its ‘Employment Agencies Standards Inspectorate’
(EASI). The UK, then, has a sector specific regulator of agencies (the GLA) and an economy-
wide regulator (EASI).

In contrast to the GLA, the EASI has a relatively long history (dating back to the 1973
Employment Agencies Act) and is rooted in the UK’s ‘light touch’ regulatory tradition. Until
September 2007 it had only 12 staff, with Gordon Brown announcing a doubling of the
workforce to 24 staff at the annual TUC conference (part of a 2007 consultation on the
‘Protection of Vulnerable Agency Workers’). The DTI (now BERR) is a member of the GLA
board but has hardly played an active role: BERR representatives have so far attended less
than half (44%) of the 16 GLA Board meetings held to-date. This is surprising given the
similarities in remit between EASI and the GLA.

Another sign of the light-touch approach is the fact that the DTI/ BERR has always opposed
gangmaster licensing and the formation of the GLA:
     “The DTI argues that licensing or registration schemes, particularly where a fee is
    demanded, are burdensome for business and public authorities alike...(and it
    has)...no plans to re-introduce licensing or bring in a form of registration as it is
    considered that neither would result in an effective regime"(House of Commons
    2002-03, para 54, 57).
The DTI/ BERR did not want GLA licensing to come into force because of the regulatory re-
balancing that this symbolised, and the associated awareness that for the GLA to work there
needed to be a move away from the ‘light touch’ regulatory approach within which BERR/
EASI was rooted (cf. House of Commons, 2002-03: para 58).

The EASI has not always been forthcoming in publicising its outputs and unlike the GLA has
not yet opened its doors to external evaluators. In terms of the data we could access, in
2005/2006 1,000 inspections were carried out for the entire agency sector in the UK by EASI
staff yielding £20,000 in workers’ unpaid wages. Further, inspections are initiated as a result
of complaints to the EASI telephone helpline. In other words, EASI is a reactive regulator and
only responds when it is asked to do so. The EASI helpline received circa 1,000 calls for the
entire agency sector in 2006: against 1,700 pieces of intelligence gathered by the GLA in just 6
months for just those gangmasters operating in the UK food industry (DTI, 2007). Continuing
this light-touch tradition, BERR/ EASI has vigorously opposed any new agency regulation: it
has argued against the EU Temporary Agencies Worker Directive (calculating that this would
cost £80-194m for agencies and £239-£387m for their clients) and has argued against the
possibility of an expanded remit for the GLA (believing that it should remain focused on
gangmasters and the UK food industry).

F. Conclusion
The migration policy narrative in the UK has shifted: from one of territorial control to one of
economic control and from zero migration to managed migration. Underpinning this shift has
been a political-economic consensus between the UK government and UK business, with a
premium placed on labour market flexibility; which in turn requires a ready supply of willing
labour i.e. migrants. From 2004, when the EU expanded to include 10 new Member States,
these migrants have largely been legitimate members of the UK workforce. As a

                                                                                             21
consequence, the location of government regulation has changed. There has been a
regulatory re-balancing: with regulation moving away from simply the supply-side (directed at
the ‘illegal’ migrant worker) to include more demand-side regulation (directed at the ‘illegal’
employer).

This partial but highly symbolic and contentious re-regulation has challenged the traditional
‘light-touch’ approach to workplace enforcement in the UK, with a resultant tension at the
heart of government: evidenced by the differences that exists between the GLA and EASI. The
rebalancing has ostensibly been progressive in the sense that regulatory attention is no
longer focused so exclusively on ‘illegal’ migrant workers, but is also focused on the
protection of vulnerable workers (migrant and British born) and on the prosecution of
unscrupulous employers who exploit them.

However, UK agencies have been regulated before (e.g. the 1867 Gangs Act and the 1973
Employment Agencies Act) and have been required to purchase licenses before (during the
1940s-1950s and 1970s-1990s). Further, licensing of agencies is almost omnipresent in the
EU, with the UK exceptional only in its decision to limit the GLA’s power to one sector of the
economy (EUROCIETT, 2007).

One might reasonably ask, therefore, why licensing has been abandoned in the past, and
whether lessons can be learnt from this? Moreover, one might also ask why (and how)
licensing schemes differ across the EU, even if the principle of agency licensing seems to have
been almost universally embraced?

Notwithstanding the importance of these two historical and geographical questions, there are
two other, arguably much more important, questions that need asking in light of the
information presented above. The first relates to the extent to which the formation of the
GLA represents a a genuine regulatory re-balancing. To elucidate, in 1996 circa 5,000 ‘illegal’
migrants were deported: by 2004 the figure has grown to 12,000. At the same time, fines on
businesses employing ‘illegal’ workers have been heightened via three pieces of legislation:
the ‘Asylum and Immigration Act 1996’, the ‘Immigration (Restrictions on Employment) Order
2004’, and latterly the ‘Immigration, Asylum and Nationality Act 2006’ (to be introduced in
2008). The Home Office (specifically the Border and Immigration Agency) has also been given
more manpower: in 1997 it employed 2,400 immigration offices but by 2005 this figure had
swollen to 5,400 (with 600 of these posts announced by Tony Blair immediately before the
2005 general election). The Home Office’s illegal working enforcement operations have
benefited considerably from this increased resource: 1,600 exercises against illegal migrant
workers were carried out in 2004 representing a 360% rise on the figure for the previous year.
Thus, whilst workplace regulation may have increased, this has been from a very low base
due to the long-standing ‘light-touch’ tradition in the UK, and regulation directed at illegal
migrant workers seems to have increased much more substantially. To put this in perspective,
in 2005 Tony Blair talked of the doubling of Home Office immigration officers to deal with
illegal migrants, whilst in 2007 Gordon Brown talked of the doubling of agency inspectors at
BERR to deal with illegal and exploitative employers. The former involved an additional 2,400
staff: the latter, an additional 12.

A second key question follows on from this: does the GLA (and EASI) have, want, and/ or
possess the power to secure, the necessary regulatory teeth to ensure that the latest
attempts to protect vulnerable migrant workers are effective and that illegal employers are
caught and suitably punished? Simply put, is there the sufficient legislative backing behind
licensing and how important has the political-economic consensus, which legitimated low-


                                                                                             22
status labour migration from around 2000, been in shaping the regulatory outcome that we
now have? In terms of the GLA, one must ask if it has the budget, staff, and legal powers to
move from simply licensing to the much more complex compliance and enforcement tasks
that will ultimately protect the integrity of its licence?

This is the third time that agency licensing has been tried in the UK; for it be ‘third time lucky’
there will almost certainly need to be a move away from the ‘light touch’ regulatory tradition
and possibly an expansion of GLA powers to cover the whole agency sector. However, it is
likely that such a move will break the political-economic consensus that called for the
legitimisation of low-status labour migration in the first place. To paraphrase Berger and
Mohr (1975) in their analysis of the last era of mass low-status labour migration: the UK
needs to decide on the extent to which it wants “machines more than men”. Significantly,
because the ‘time zones’ of temporary migrant work have shifted since Berger and Mohr’s
day, this decision is, arguably, now a much more pressing and also much more difficult one.

G. References
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Coe, N., Johns, J., and Ward, K. (2007) Mapping the globalization of the temporary staffing
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 2007].
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