INSIGHT: UK chemicals workers fear no-deal Brexit could cut rights, permanence in Reach paramount - IndustriAll

Author: Jonathan Lopez

2019/01/30

LONDON (ICIS)--A disorderly UK exit from the EU in March could endanger rights for the country’s chemicals workers, which have so far been set in line with EU regulations, according to the head for chemicals at Europe’s trade union federation IndustriAll.

Maike Niggemann added that both workers’ representatives and employers organisations agree that the UK permanence within the EU chemicals regulations Reach is paramount to avoid large disruption to both chemicals production and trade for the UK and its EU trading partners.

However, in an opinion shared also by employers’ organisations across Europe, she said Reach can "sometimes be perceived as a bureaucratic monster” which during the last 10 years has put a strain on smaller companies unable to deal with the costs of implementing the regulation.

The trade union representative added that European chemicals production is not “doomed” in the long term, although the region should nurture more research and development (R&D) so its innovation is not left behind its large overseas competitors, namely the US and China.

IndustriaAll European Trade Union represents 7m employees within the manufacturing sectors in the region; the federation is part of the larger European Trade Union Confederation (ETUC).

“I still think the EU has amazing labour rights, at least compared to the UK, and I can say that our member organisations are scared to leave the EU because thanks to it there is a minimum [EU-wide] standard for labour rights,” said Niggemann.

“You will probably find the same feelings from chemical workers in eastern Europe.”

Moreover, the UK departure from the EU has brought to light a fundamental problem: after 40 years of membership, and 10 since the implementation of Reach, disentangling the UK from the registrations system set up in the 28-country bloc is set to be complicated.

Like most aspects of Brexit post-departure, the permanence of the UK within Reach, as well as its membership to the EU’s regulator the European Chemicals Agency (ECHA), remain uncertain.

“For our affiliate organisations in the UK, the primary thing would be to keep the chemical industry within Reach because falling out of the regulatory framework would be a disaster, after all the registrations that have been done [in the UK since Reach came into force in 2008],” she said.

The UK has consistently featured in ECHA’s studies as one of the most Reach-compliant countries, with a large share of total registrations undertaken there.

Moreover, a UK parliamentary committee concluded in 2018 that the country was unprepared to regulate chemicals on its own post-Brexit.

Industry organisation have also said that the UK’s government’s contingency plans for chemicals in case of a no-deal Brexit were “unworkable”.

Reach was considered by chemicals companies in 2008 as an existential threat which would endanger future global competitiveness; 10 years on, however, and some trade groups have started saying that the Reach burden was manageable and, even, beneficial in some aspects.

The high costs associated to it, however, have even being recognised by the European Commission, the EU’s executive body, when in 2016 it said EU chemical regulatory costs for companies amounted to €9.5bn/year.

Niggemann sided with employers on this one, arguing that at her time in one of Germany’s chemical trade unions she saw cases of smaller firms which dropped chemicals produced in small amounts from their portfolios because registration costs made them unprofitable.

“Reach was a good idea, but I understand that it is sometimes perceived as a bureaucratic monster to a certain extent, with the requirements for companies to register products being somehow out of proportion, which is a major problem for SMEs [small- and medium-sized enterprises],” she said.

“Obviously, big companies just need to employ someone to do this work.”

INNOVATION KEY FOR THE FUTURE
Niggemann said that European chemicals workers are well aware of how China’s rise is displacing the region as one of the major global chemicals producers.

While chemical production has remained fairly stable for the last 10 years, the increase in Chinese production has displaced both the US and Europe as the main global chemicals producers, a trend only set to increase going further.

Despite it all, however, European chemicals are not doomed, said the trade union representative, because the chemical industry will be the provider of products and applications to combat climate change.

For instance, she mentioned residential insulation – which reduces energy consumption – or lighter materials, which are used mostly in transport and also reduce energy needs.

“China is a special case, because they have completely different structures: If the government decides to put its efforts in promoting certain industry, that will happen. There is a lot of discussions about China within the trade unions, because they are moving fast in everything they put their mind into,” added Niggemann, pictured.

“We find that fascinating, in a way, but we would not want to exchange our free society and the labour rights attached to it.”

The US’ shale gas boom has also prompted more chemical capacities to come online, as the main derivative product from natural gas is ethane, which can be turned into ethylene and then polyethylene (PE), placing more competition for European chemicals.

While the big wave of polymers exports into Europe predicted by some analysts has not arrived to the region's shores yet, lower PE grades, like metallocene linear low density polyethylene (MLLDPE), were already entering the continent by the end of 2018.

Niggemann said that although the US chemical industry represented less of a threat to European chemicals than China, the EU should follow the US’ lead on R&D schemes in order to prop up innovation and keep the region’s industry competitive in the global stage.

For that, both private and public investment would be needed, she said.

“[Challenges like climate change] will make likely that we will need more and better chemicals, but we need to ensure we foster the right framework for research and innovation – they do that better in the US, attracting bright minds,” she said.

“In Europe we have few great companies, very big players, but also a lot of small firms which are very traditional and play a small role.”

‘PSYCHOLOGICAL STRESS’
Innovation will invariably bring more automatisation to the chemical industry, although Niggemann argued that chemical plants in Europe have already undertaken automatisation processes in the last 30 years.

Across the world, manual workers are increasingly hearing that their jobs may be redundant within few decades due to digitalisation, and Niggemann conceded that there is growing “psychological stress” among workers in Europe.

“However, given the already-high automatisation of chemicals plants, I would say that workers within this specific industry face challenges, rather than problems: the future chemicals plants will need highly trained workers who can programme the software to make everything work,” she said.

“We see an increase in psychological stress. That is why we want to be part of the process of digitalisation, not spectators to it. Obviously there will be job losses, and not everyone can be retrained to do something else and there may be scenarios in which there are very few jobs left.”

Therefore, she concluded, that western societies will need to look carefully at future taxation. While there may be fewer jobs in manufacturing sectors, the demographic situation will also be different.

“You may have not 1.2m jobs anymore [the estimated number of workers currently employed by Europe’s chemicals], but you may also have a much smaller population at the working age. There are many societal dimensions to this debate: How many people will have manual jobs, and how we make sure we have a functioning society?” said Niggemann.

“Where will taxation come from? Do we tax the value added, do we still tax labour? At the beginning of this transition, we need to make sure to train as many people as possible, and try not to leave anyone behind.

"But I am not naive and I don’t believe everyone can be retrained, or wants to be retrained. We are not against digitalisation, we not asking to stop it: that would be stupid. But we want to be part of it and we don’t want technology to be imposed on the people we represent.”

DECARBONISATION POSSIBLE
With climate change threatening to change livelihoods around the world, industrial technologies will also need to adapt. Talk of decarbonisation – making the industry carbon dioxide (CO2) neutral – has become recurrent among the manufacturing sectors.

Niggemann said she is optimistic that a full decarbonisation of the chemical industry – an energy-intensive sector – is possible, arguing that the technologies needed to undertake the challenge have already been invented.

“From a technological point of view, everything is there: we could decarbonise the industry. But there is not a business economy there yet [to make profits]. While some big companies may be able to implement those cleaner technologies, most SMEs could not,” she said.

“But I have become a strong believer in technological possibilities, and I think we can still fix global warming. But one thing is a technological solution and another how you implement it, and how you get society behind it.”

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Pictures sources: European Commission and IndustriAll

By Jonathan Lopez