UK workers 'face wage cuts if UK joins Euro'

British Manufacturing workers would face a massive assault on their wages and working conditions if Britain joined the euro, according to a pamphlet published by British Labour eurosceptics today.

Entry into the single currency would mean joining the “hire-and-fire low-wage culture” currently spreading across the eurozone and lead to industrial unrest, warned Labour Against the Euro.

“Wage flexibility” was the only tool for boosting competitiveness left to eurozone politicians deprived of the ability to devalue their currency, alter interest rates or increase borrowing, they said.

Previous attempts to maintain fixed exchange rates – with the Gold Standard in the 1920s and ERM in the 1990s – led to large-scale bankruptcies, manufacturing job losses and wage squeezes, argued the pamphlet, entitled The Manufacturing Case Against the Euro.

“The euro is leading to ‘wage flexibility’ – code for the breakdown of national wage bargaining and a hire-and-fire, low-wage culture across continental Europe, once a beacon of workers’ rights and cohesion,” it said.

“British manufacturing employers may be tempted to support the euro on these grounds, but they will find that the co-operative relationship built up with their employees will disintegrate.

“British manufacturing workers face a threat to their wages and working conditions far greater than that endured under Thatcher’s deregulation. Why should they be made to suffer a second assault for the sake of a badly-designed single currency system?

“It is because the euro is being used as a catalyst for deregulation of European labour markets and a tool to bear down on wages that the trade union movement in Britain – and the eurozone – is turning against the single currency.”

Demands for Britain to join the euro in order to make UK manufacturing more competitive were in reality no more than a disguised call for a sterling devaluation – described by TGWU general secretary Bill Morris as a “one-off gamble on the currency markets” – the leaflet said.

Joining at the wrong exchange rate would leave manufacturers with a “permanent lack of competitiveness”, it warned, adding that it was “wishful thinking” to believe that other EU members would agree to a rate which would give UK businesses an advantage against their own manufacturers.

The single currency was designed as a “monetarist straitjacket”, which was “hopelessly inflexible and anti-growth and jobs”, said the pamphlet.

With the European Central Bank’s tough inflation target of 0%-2% and the “absurd” restraints on tax and spending imposed by the eurozone’s Growth and Stability Pact, the UK would be forced to cut £20 billion off Chancellor Gordon Brown’s spending plan if it joined.

“The eurozone’s design faults are intractable and long-term,” said the leaflet. “Boom and bust will be the inevitable result.”

In a foreword to the leaflet, TGWU assistant general secretary Barry Camfield - a candidate for the union’s top job when Mr Morris retires this summer – said it contained “very strong arguments”.

“The reality, as this paper shows, is that the euro has been a catalyst for an onslaught on the rights that workers enjoy in the rest of Europe,” he said.

“At a time when the UK is outperforming the eurozone, with roughly half its unemployment rate, faster growth and increasing investment, the argument is that it would damage our manufacturing industries even more to join a monetary union which is clearly stumbling and failing ordinary working people.”

Labour backbencher Ian Davidson, chairman of Labour Against The Euro, added: “We must not allow British manufacturing to be crucified by the adoption of an uncompetitive and non-adjustable exchange rate simply to advance the political objectives of an elite.

“Mass unemployment is not a price worth paying for dogma.”