Ed Miliband vows to end UK's 'dependency' on cheap foreign labour

Labour leader Ed Miliband has vowed to end what he calls Britain's "chronic dependency" on cheap foreign labour if he wins the next election.

He said low-skilled immigration was making the cost of living crisis worse.

Writing in the Independent on Sunday, he promised to stop firms paying agency staff less than permanent workers by closing a loophole in the law.

Employers' organisation the CBI said Mr Miliband was putting jobs at risk by targeting a "perfectly legal" practice.

Mr Miliband has attempted to toughen Labour's stance on immigration amid claims by his rivals - and some former Labour ministers - that the party got it disastrously wrong by opening the door to East European migrants in 2004.

'Dependency'

In his article, he attacks the anti-EU stance of UKIP leader Nigel Farage suggesting that, although border controls were important, the real problem was with unscrupulous firms exploiting cheap labour.

"We have to change our country's chronic dependency on low-skill, low-wage labour. A dependency that is getting worse not better," he writes.

"What chance of rising living standards for all when unscrupulous firms can exploit workers from abroad to get around the minimum wage?

"What chance of giving everyone a fair shot when recruitment agencies are allowed to recruit only from overseas, excluding those in the area from even hearing about the jobs?"

He proposes:

• Increasing fines for firms that breach minimum wage legislation

• Banning recruitment agencies from having a policy of hiring only foreign workers

• Stopping the use of "tied housing", which allows agricultural firms to pay less to workers who get accommodation as part of their job

Mr Miliband also pledged to close a "loophole" in the law which "allows firms to avoid paying agency workers at the same rates as directly employed staff".

Under the EU's Agency Workers Directive temporary staff are entitled to the same basic pay and conditions as permanent staff - but agencies can get round this by offering their workers permanent contracts, under an opt-out clause.

Mr Miliband said this "loophole" was being used in sectors like food production "where levels of employment from abroad are high" and where as many as 16% of workers were employed by agencies.

But his proposal did not go down well with employers' organisation the CBI.

Chief policy director Katja Hall said: "The flexible labour market in this country has saved jobs and kept our economy going during tough times.

Labour said a loophole in the law was being used in sectors such as food production "where levels of employment from abroad are high"

"Undermining this flexibility would put the very system which has kept unemployment down at risk. The agency directive was not welcomed by business, and further gold plating of EU rules can only cost jobs."

She said many agencies preferred to pay workers through permanent contracts, adding: "This is perfectly legal, was supported by trade unions at the time and also gives employees security of income between jobs."

'Managed migration'

Trade union umbrella body the TUC has said that agency workers are paid on average up to £135 a week less than permanent staff doing the same job.

Labour's pledge comes days after rules restricting the right of Romanians and Bulgarians to work in the UK were relaxed.

Prime Minster David Cameron said the government was ensuring the minimum wage was being paid to all employees and clamping down on illegal immigration.

Asked if immigration had been positive or negative for Britain, he replied: "Well, it's been too high. I'm in favour of managed migration."

But he would not be drawn on how many people he expected to come to Britain from Romania and Bulgaria, saying he wanted to avoid repeating the "ludicrous" mistakes made by the previous Labour government.

"We're not making a forecast because I think it's unlikely we'll get that forecast right," he added.

Speaking on the Sky News Murnaghan programme, UKIP leader Nigel Farage, said uncontrolled immigration from Eastern Europe had created a "massive oversupply of unskilled labour" and "pushed wage inflation down" which had boosted the profits of "big corporations".

He said firms needed to pay more, but added: "I think that we need to be giving people in our own country an opportunity to get work."

He suggested only people earning an income on a par with the national average should be allowed into Britain.

"We should be selective. The single most important criteria should be that we want people coming to this country who have got a skill to bring, who economically are going to earn more than £27,500 a year."

He also said he was in favour of extending the three-month waiting time before new migrants can claim out-of-work benefits to five years, which he said would be "more reasonable".