In addition to presenting a paper defending a republican theory of labour law, I had the opportunity to attend and comment upon a number of panels on the theme of automation. In this blog post, I would like to briefly summaries some aspects of those presentations I attended on this theme before reflecting thereupon. I cannot hope to do justice to the presenters ideas in full and await their final published thoughts. Therefore, what follows must be considered by the reader to be highly preliminary and incomplete.

Automation at Work

Regulating AI

Valerio de Stefano and Silvia Rainone discussed the ignorance of EU law policy towards the potential of AI to regulate the workplace. As Prof de Stefano recently noted on this blog, the EU’s draft AI Regulation does not address labour issues in detail. The role of AI in the workplace is categorised as “high risk” but nonetheless remain permissible. Moreover, the proposed regulation does not question the morality/legality of AI in the workplace, eg, workplace monitoring. In other words, the appropriateness of increased technological management in the workplace is ignored completely.

Algorithmic Discrimination

Jeremias Adams-Prassl and Aislinn Kelly-Lyth addressed the now well-analysed question of whether automated discrimination is lawful. Ms Kelly-Lyth published an article on this question in the Oxford Journal of Legal Studies earlier this year, arguing that much of such discrimination is indirect and therefore justifiable. However, in this presentation, Prof Adams-Prassl and Ms Kelly-Lyth sought to argue that such discrimination is, on occasion, direct and cannot therefore be justified. One of the most interesting points made by Ms Kelly-Lyth was that one of the “selling points” of such technology is that it is better than human beings, but if it discriminates unlawfully nonetheless, is that a good enough justification?

Solutions?

In terms of potential solutions to the problems these speakers and others raised, a number emerged in later presentations. Einat Albin suggested that it might be appropriate to impose legal obligations on AI manufacturing companies and even AI itself. Unsurprisingly, there are serious philosophical and practical questions emerging from the latter proposal, but the idea should not be dismissed off-hand. 

Tammy Katsabian suggested the need to ensure detailed compliance with labour law in the design of technological-management systems. For example, Dr Katsabian noted that customer-rating systems, which play an important role in performance management within the platform economy, should be designed so that, eg, customers can only provide non-discriminatory feedback.

With respect, missing from some of these earlier presentations were considerations of the utility of core labour rights in response to these problems. In a joint presentation, Joe Atkinson and Philippa Collins emphasised the importance of human rights in strengthening labour rights to date and refocussing the discussion on traditional rights such as the freedom of association and the emerging human right against unjustified dismissal. In my view, this seems to be the best approach, for the following reason.

The normal justification of labour law is the inequality of bargaining power between capital and labour. Traditionally, the best form of “anti-power” in response to this situation has been collective action in some way or another. And as historians of British and Irish labour law will know, the emergence of the right against unfair dismissal under statute was in response to overwhelming collective action by labour in the mid-twentieth century. What appears to be the subsequent constitutionalisation of this right by the ECtHR in recent years must be viewed as a direct result of collective action over many decades. It would therefore stand to reason that a continued and deepened focus on collective action as a response to the exacerbation of existing inequalities by technology in the workplace should be the primary path adopted by labour.

This is not to diminish the individual reform proposals of earlier presenters noted above; but what it does suggest is that such reforms are most likely to take place within the context of successful and sustained collective action.

Automating Work

Cynthia Estlund made a number of prefatory remarks in advance of the publication of her latest monograph this July, Automation Anxiety: Why and How to Save Work. The starting point of this monograph appears to be that, this time(!), technology really is going to replace jobs en masse. However, it is for humans to determine our future and whether it will be dystopian or broadly appealing. Unsurprisingly, Prof Estlund canvasses all of the usual labour law hot topics – the need for decent work, adequate income and allocating available work to facilitate more free time for all. The precise way in which these reforms are to be achieve are uncertain at this point but, in my humble opinion, it would seem that, once again, a conscious and collective choice needs to be made about the importance of work, its costs and benefits, in our culture.

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The issue of the assessment of non-product-related PPMs measures under the GATT is critical for climate policies and trade.

As noted in Part 1, WTO Members wishing to implement non-product related PPMs measures will likely be blamed for infringing WTO law, regardless of the protectionist intent of the measure. This may deter WTO Members from adopting unilateral measures. In order to avoid this, they may try to shape their regulations in a way that they think will make them more susceptible to be considered WTO-compatible, relying on assumptions. For example, they may want to weigh taxation measures against regulatory measures, or design their regulations so as to mitigate the detrimental effect on competitive opportunities for imported products (in order to comply with GATT Article III, as interpreted so far by case-law). This requires a considerable amount of time and entails significant administrative costs. Most importantly, this may result in a loss of national competitiveness and undermine the effectiveness of these measures, compromising thereby their adoption.

Governments wishing to implement PPMs related measures may just decide to go ahead, regardless of the GATT compatibility. Which will certainly spill over in trade disputes. And relying on dispute settlement and Article XX alone is not a panacea, for either regulating or exporting countries.

At the outset, it must be reminded that Article XX sets out a closed list of justifications. And it is not self-evident whether measures for the preservation of climate at the global level falls within one of them. I won’t discuss this in detail here. I believe though that panels and the Appellate Body would accept that these measures could potentially be justified under Article XX(b) which covers measures “necessary to protect human, animal or plant life or health” and/or Article XX(g) which covers measures “relating to the conservation of exhaustible natural resources”.

But are WTO judges well enough equipped to rule on whether a measure relating to PPMs sufficiently relates to the conservation of biodiversity or the atmosphere under Article XX(g), or whether it is effective enough in fulfilling its objective of mitigating global warming under Article XX(b)? In trying to answer this question, one needs to consider the followings:

There is no internationally agreed way of measuring GHG emissions released in connection with the production of different goods. Therefore, a panel would have no reference against which it could assess whether a measure discriminating products based the alleged amount of such emissions is fit for purpose and effective (except that provided by the regulating country).

Regardless, it would still be difficult for judges to assess the effect of a measure at the global level. In theory, measures impairing market access for goods whose production results in higher GHG emissions contribute to curbing such emissions, and making sure that the positive impact of national climate measures is not offset by an increase in imports of lower-priced/higher GHG emissions products. In practice though, the effectiveness of the measure at doing so is hard to evaluate. Especially since such unilateral measures may have other unintended consequences, like the diversion of such products to other markets where the same conditions don’t prevail.

For all the reasons outlined above, it would be tricky for WTO judges to distinguish between measures aimed at levelling the playing field in a manner necessary to fulfil the objective of net GHG emissions savings and measures that are too trade-restrictive.

As regards measures implementing border adjustments, they have a “competitiveness” component. Not only because “levelling the playing field” is presented as a necessary condition for national climate measures to be effective. But because it makes them politically acceptable. However, Article XX exceptions are “purely” environmental/health related. If it appears that one of the objectives of the measure at issue is to offset the loss of national competitiveness due to compliance with stricter environmental requirements, this measure may not be eligible for a defence under Article XX.

WTO judges may show sympathy for the environmental cause and great deference towards governments and their policy space. But delineation between what is justifiable and what is not, without being grounded on internationally agreed guidelines, would likely raise concerns about WTO judges legitimizing unjustifiably restrictive/protectionist measures under “green” cover.

In any event, the WTO case-law will develop only incrementally and, on a case-by-case basis, such that uncertainty and the lack of predictability will prevail for a long time to come, with the risk of trade disputes and retaliations.

3. Avenues for reflection

The issue of non-product-related PPMs measures is at the heart of climate policies. Yet, a discussion on the treatment of these measures in the WTO framework has been avoided so far by WTO Members, proponents of PPMs measures as well as their opponents, for the very same reasons: engaging a discussion on PPMs would weaken their case by suggesting existing WTO rules do not support their stances.

It may be time to put the relationship between trade and climate change on the WTO agenda, and enhance the relationships between the WTO and institutions and fora dealing with climate change.

WTO Members could engage discussions on the interpretation of GATT Article III with respect to:

i) whether a tax on carbon emissions (with a border adjustment) constitutes an internal tax measure and as such falls within the scope of Article III:2;

ii) the meaning that should be given to the term “treatment no less favourable” in Article III:4, specifically whether it should be read in light of a legitimate regulatory purpose (revisiting the criteria for “likeness” determination to differentiate between products based on their non-product related production processes may be too far-reaching).

It would also help to aim for harmonization and consensus in the framework of the United Nations Framework Convention on Climate Change (UNFCCC) and agree on guidelines on the measurement of GHG emissions, and to the extent possible on acceptable unilateral measures to tackle carbon leakage. WTO judges could rely on these internationally agreed guidelines, or the WTO legal corpus could incorporate them by reference.

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Countries are designing national measures such that their positive impact at the global level is not undermined by their trading partners’ inaction, and such that they do not result in a loss of competitiveness for the domestic industry subject to additional costs (“leveling the playing field” is considered as a condition of enacting and applying them). Therefore, national measures affect trade. And the question whether and how these measures can comply with multilateral trade rules is being posed.

This question is particularly acute for measures discriminating between products based on their processes or production methods that do not leave a physical trace in the products (“non-product-related” PPMs) such as GHG emission-based measures or measures affecting products associated with deforestation. In this case, discrimination between products is not based on their intrinsic properties (like their noxiousness, their recyclability, or other factors), but solely on the global environmental and climate footprint of their production.

1. Discrimination based on non- product-related PPMs and WTO law

With respect to internal taxation and regulation, WTO rules requires non- discrimination – de jure or even de facto – among imported “like” products (this is application of the most favoured nation principle), and between imported and domestic “like” products (pursuant to the “national treatment” principle).

The purpose of national treatment – expressed in Article III:1 of the GATT – is to prevent WTO Members from applying internal measures in a manner which affects the competitive relationship, in the marketplace, between imported and domestic products, “so as to afford protection to the latter”. (emphasis added).^[1]EC – Asbestos (AB), paras. 97-98.

A determination of likeness must be informed by this principle. It is a determination “about the nature and extent of a competitive relationship between and among the products at issue”^[2]U.S. – Clove Cigarettes (AB), paras. 103-120., because it serves to delineate the scope of products that should be compared to establish whether less favourable treatment is being accorded to imported products.

Some criteria (none of which being decisive on its own) have been suggested by case law for determining, on a case-by-case basis, whether products are “like.” These are the products’ end-uses, consumers’ tastes and habits in the relevant market, the products’ properties, nature and quality, and their tariff classification. As of today, non-product-related PPMs have not been considered as a criterion to assess “likeness.”

This suggests that the way goods are produced is not relevant in determining the competitive relationship between goods at issue. It is logical: unless consumers are able to distinguish between products based on their PPMs (which they are not, absent relevant consumer information), such PPMs have no impact on consumers’ perception and choices.

Where products involved have been found to be in a sufficiently close competitive relationship, it remains to be determined;

i) whether imported products are applied internal taxes or internal charges of any kind in excess of those applied to like domestic products (if the measure qualifies as an internal indirect tax measure, applied at the border).^[3]Article III:2, first sentence.

But would a tax on the amount of carbon resulting from the production of products – not the products themselves – be considered as an indirect tax measure? If not, it would qualify as a border measure, inconsistent with GATT Article II:1 prohibiting countries from imposing duties and other charges in excess of those agreed in their schedules of concessions.

ii) whether the measure that discriminates (even de facto) between products based solely on their PPMs accords “less favourable treatment” to imported products, if the measure at hand is a regulatory, non-tax measure.

Case-law in the context of the Agreement on Technical Barriers to Trade (TBT Agreement) is interesting in this respect. The TBT Agreement (which includes the national treatment principle) applies only to “technical regulations,” which are measures laying down the products’ characteristics. This sub-set of regulatory measures covers inter alia labelling requirements relating to PPMs whether or not product-related (they modify the appearance of the products and provide information to consumers, impacting thereby their preferences). Where the measure at issue results in a de facto detrimental impact on competitive opportunities for imported products, it can still be found non-discriminatory if such a detrimental impact “stems exclusively from a legitimate regulatory distinction”, following the Appellate Body’s case law.

Measures based on non-product-related PPMs that do not regulate the intrinsic characteristics and/or appearance of products would fall outside the scope of the TBT Agreement and should be governed only by GATT rules on national treatment (Article III).^[4]See EC – Seal Products (AB), para. 5.12, suggesting that a PPMs prescribed by a measure must have “a sufficient nexus to the characteristics of a product” for this measure to fall under the … Continue reading Logically, one may think that in a similar manner, the regulatory objective of a measure would be a factor to considered in assessing whether it results in “less favourable treatment” for imported products. After all, the broad and fundamental purpose of national treatment – as expressed in Article III:1- is to avoid protectionism in the application of internal measures. The Appellate Body has even recognized that the principles set forth in this paragraph shall inform the rest of Article III (including provisions on “less favourable treatment”).^[5]Japan – Alcoholic Beverages (AB), para. 18.

However, the Appellate Body failed to draw practical conclusions therefrom, as evidenced by the test applied by the Appellate Body for “less favourable treatment” determination: it suffices to determine whether the measure at issue modifies the conditions of competition to the detriment of imported products, no matter the regulatory objective (with the notable exception of Article III:2, second sentence).

Accordingly, a regulatory measure differentiating between products based on their non-product-related PPMs, origin-neutral on its face (treating imported and domestic products whose carbon footprints are equivalent in the same way) and intended to address climate change, would be found to violate the national treatment obligation – irrespective of whether it is applied in a protective manner – if it has been determined that it has a de facto disparate impact on competitive opportunities.

Such a finding would be possible if, overall, a heavier burden is placed on imported products as compared to domestic products as a result of the GHG emissions “content” of imported products being higher, on average, than that of domestic products (while the regulatory objective is precisely to mitigate/curb GHG emitted globally).

The Appellate Body has given two successive explanations for not considering the regulatory purpose. First, Appellate Body has ruled that unless the relevant provision of Article III (paragraph or sentence) specifically invokes Article III:1 (which is the case of Article III:2, second sentence, which forbids WTO Members to apply internal taxes or charges to imported or domestic products “in a manner contrary to the principles set forth in paragraph 1”), the presence of a protective application need not be established separately from the specific requirements set out in the applicable provision.^[6]Japan – Alcoholic Beverage (AB), p.18, and EC – Bananas III (AB), para. 216.

In an effort to give effect to “textual differences,”^[7]Japan – Alcoholic Beverage (AB), p.18. the Appellate Body constructed a theoretical distinction between (i) Article III:1 as a general principle informing the rest of Article III; and, (ii) Article III:1 as a stand-alone requirement in Article III:2, second sentence only.^[8]Ibid. In practice, this simply deprives Article III:1 of any effect (except in the latter case), in contravention with the fundamental principle of effectiveness in treaty interpretation.

Indeed, it is hard to figure out how national treatment provisions (especially on “less favourable treatment”) could be interpreted in light of their fundamental purpose – which is to avoid protectionism in the application of internal measures – without considering a measure’s protectionist application (or absence thereof). The practical application of this purportedly rigorous, textualist interpretation has led to negate the spirit of GATT’s national treatment provisions. A measure that is not applied so as to afford protection to domestic production could still be found in violation of a provision whose fundamental purpose is to avoid protectionism.

The second justification advanced by the Appellate Body for not considering the regulatory purpose is that Members’ right to regulate trade is enshrined in Article XX, and therefore, Article I:1 and III:4 do not involve an examination of whether the detrimental impact of a measure on competitive opportunities for like imported products stems exclusively a legitimate regulatory distinction.^[9]EC – Seal Products (AB), para.5.117-5.125.

This reasoning by the Appellate Body seems to contradict its approach to textual interpretation described above. In the context of Article III:1 analysis, it went out if its way to give meaning to textual differences and “omissions” with a view to “respecting, and not diminish in any way the meaning of the words” used in the text.^[10]Japan – Alcoholic Beverage (AB), p.18. Now, the existence of a General Exception alone suffices to not interpret and apply Article III on its own terms.

The Appellate Body recalled that, by contrast, consideration of the regulatory objective in applying the national treatment rule under the TBT Agreement is justified by the absence in the TBT Agreement of “general exceptions” such as those contained in Article XX of the GATT, while the object and purpose of the TBT Agreement is to strike a balance between trade liberalization and Members’ right to regulate trade.^[11]Clove Cigarettes (AB) para. 174, referring to para. 95. According to the Appellate Body, “in the GATT 1994 this balance is expressed by the national treatment rule as qualified by the exceptions in Article XX, while, in the TBT Agreement, this balance is to be found in the national treatment provision itself, read in the light of its context and its object and purpose”.^[12]Clove Cigarettes (AB) para.109.

This jurisprudence seems to suggest that the GATT national treatment rule qualified by the exceptions in Article XX is in fine equivalent to the TBT national treatment rule as developed by case-law. This is not the case.

First, if a measure deemed discriminatory under the GATT may still be “justified” under Article XX (General Exception) in certain conditions, Article XX can only be used as a defense: it can be invoked only when the measure at issue has been challenged before the Dispute Settlement Body and has been found to be prima facie inconsistent with GATT rules. This entails that a WTO Member applying a measure that is non-protectionist, clearly justified, and which may have a disparate impact on conditions of competition bears the political burden of applying a measure that will likely be considered WTO-incompatible, until it is challenged at the WTO and justified.

Second, the list of regulatory objectives in Article XX is exhaustive. By contrast, the list of legitimate objectives in the TBT Agreement – considered in the national treatment analysis – is not. It follows that pursuant to case-law, not all internal measures pursuing a non-protectionist regulatory objective could be justified under Article XX. Is this really the spirit of the GATT?

Should PPMs measures to address climate change and environmental protection at the global level be left to a WTO judge examining a defence under Article XX?

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Background to Collective Sectoral Regulation

As my former colleague at Trinity College Dublin, Alan Eustace, has recently outlined in the European Labour Law Journal, sectoral bargaining agreements have a long history in Irish law. Since the establishment of the statutory tribunal known as the Labour Court in the mid-twentieth century (on which, see my previous post here), any party to a collective agreement could apply to the Labour Court to have that agreement “registered”, resulting in it becoming binding on all parties operating in the relevant sector of the economy by incorporation into individual contracts of employment by operation of law. It was also possible for tripartite bodies known as Joint Labour Committees (a body operating under the auspices of the Labour Court) to produce sectoral agreements which were binding on all parties in the relevant sector.

However, a series of judgments of the Irish superior courts in the last decade largely deconstructed these regulatory mechanisms on the basis that they involved the creation of legislation by non-legislative bodies. Essentially, the courts held that these mechanisms breached the “non-delegation” doctrine emerging from the courts’ constitutional jurisprudence on Article 15.2.1° of the Constitution of Ireland. Historically, this doctrine has prohibited undue delegation of legislative authority to regulators, other than the Irish Parliament, in the absence of clear “principles and policies” in primary legislation, such that all delegates need to do is “fill in details”. Evidently, the recognition and enforcement of terms and conditions of employment in whole sectors of the economy involves more than merely filling in details.

The Supreme Court on Collective Sectoral Regulation

In Náisiúnta Leictreach Contraitheoir Éireann Cuideachta Faoi Theoireann Ráthaíochta v. The Labour Court and Others [2021] IESC 36, the Supreme Court had to consider, inter alia, the latest legislative response to the aforementioned series of cases concerning the constitutionality of collective sectoral regulation, namely, Part 2, Chapter 3 of the Industrial Relations (Amendment) Act 2015. 

This chapter provides for Sectoral Employment Orders (“SEO”)—secondary legislation created by the Minister for Business, Enterprise and Innovation which establish terms and conditions relating to remuneration, sick pay or pension schemes for workers in entire sectors of the economy based on a recommendation from the Labour Court. The Minister could only make an SEO if: the Labour Court, in making its recommendation, had adhered to a number of procedural safeguards, such as satisfying itself that the proposed SEO would be “likely to promote harmonious relations” between workers and their employers and having regard to considerations such as the impact of the SEO on levels of (un)employment and competitiveness; and the draft SEO adopted by the Minister was approved by a resolution of the Irish Parliament.

The Supreme Court, in determining that the collective sectoral regulation mechanism contained in the Act was constitutional, held, inter alia, that while setting minimum terms and conditions for employment in an economic sector might involve choices by the Labour Court, these choices were not legislative in nature, even if they involved complex questions and were likely to have significant legal and economic consequences when adopted by the Minister. There were appropriate procedural safeguards in place to ensure that the Labour Court had regard to relevant interests and that the order was approved by the Irish Parliament.

In addition and of particular interest to EU labour lawyers, MacMenamin J, who gave the leading judgment, had regard to the Viking/Laval quartet and subsequent case law of the CJEU, in particular Cases C-413/13 Kunsten and C-437/09 Prévoyance, confirming that: collective agreements intended to improve employment and working conditions do not fall within Art 101(1) TFEU; and that public authorities can extend a collective agreement erga omnes within an occupational sector. Immediately after citing these authorities, MacMenamin J noted that “the principles and policies in the [Act] were directed at a particular understanding of competitiveness (…) to be contrasted with laissez-faire free market competition”. Finally, in concluding his analysis of the constitutionality of the relevant chapter of the Act, MacMenamin J referred to Demir v. Turkey and observed that “collective bargaining is now seen as a fundamental feature of the social market within the Union.”

While the Court thus concluded that the relevant parts of the Act were constitutional, it nonetheless considered that the particular SEO at issue in the case was ultra vires the Minister and the Labour Court because the latter did not state its reasons for adopting its recommendation.

Reflections

A recent report published by FÓRSA, the leading public sector trade union in Ireland, noted that Ireland is an outlier in the EU when it comes to trade union density and collective bargaining coverage, the worst in Western Europe (except the UK) and joint worst performer (with Greece) among pre-2004 accession states in terms of representation and participation. The report suggests three reasons for Ireland’s poor performance in these respects: the Financial Crisis; Irish constitutional jurisprudence (“the most significant challenge”); and its voluntarist model of industrial relations.

The judgment of the Supreme Court discussed in this blog may have the effect of nudging at least part of Ireland’s constitutional jurisprudence towards a more collective bargaining-friendly regime. In particular, insofar as the judgment affirms the constitutionality of a statutory tribunal making recommendations concerning key terms and conditions of employment in occupational sectors, it stands to reason that legislation facilitating the introduction of such recommendations and consequent SEOs on emerging labour law issues such as automation in the workplace, the platform economy and privacy, as well as more traditional problems concerning working time, fair procedures in the workplace and collective labour rights, may be constitutionally sound. 

Admittedly, as FÓRSA’s report notes, serious obstacles remain, such as the lack of any specific constitutional protection for collective bargaining and the absence of a constitutional obligation on employers to recognise or bargain with trade unions. Nonetheless, the overall tone of the Supreme Court’s judgment—acknowledging the need to regulate a competitive labour market, the EU law background and the increasingly important role collective bargaining appears (rhetorically, at least) to be playing in the EU’s current legal and policy work—is a welcome step in addressing “the most significant challenge” to Ireland’s collective sectoral bargaining regulation system.

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Background

As Anthony Kerr SC has outlined in detail in the European Labour Law Journal, immediately prior the 2015 reforms, there were no less than five distinct statutory workplace dispute resolution systems in Ireland (the Labour Court, Employment Appeals Tribunal, Rights Commissioners, Equality Tribunal and National Employment Rights Authority) which dealt with various kinds of workplace disputes, such as unfair dismissal, anti-discrimination, labour standards compliance, wage, notice and industrial relations disputes. Naturally, disputes not falling within these areas were to be taken directly to the ordinary courts. While the constitution and powers of these statutory workplace dispute resolution systems varied over time, by 2015 the following features stood out. Most of these tribunals were composed of non-lawyers but their decisions were binding, albeit with a right of appeal de novo to the Circuit Court (in some situations) and a general right of appeal on a point of law only to the High Court; and proceedings were conducted in public, in three out of five of these tribunals.

In the early 2000s, calls for substantial reform began to emerge from workers, employers and employment lawyers. These culminated in a speech by Richard Bruton TD, then Minister for Jobs, Enterprise and Innovation, declaring that “root and branch” reform would be conducted to develop a single, streamlined, efficient and non-legalistic workplace dispute resolution system. The outcome was the much-anticipated Workplace Relations Act 2015 which established the WRC. With the exception of the Labour Court and the National Employment Rights Authority, the WRC replaced all five previous statutory workplace dispute resolution systems, addressing all categories of dispute which previously fell within the remit of those tribunals. The workplace dispute resolution system established thereby is roughly as follows.

Key Features of Ireland’s Workplace Dispute Resolution System

If a complaint is made to the WRC, it must first be determined whether it could be resolved by mediation. If not, then it may be resolved by an Adjudication Officer employed by the WRC. The key features of this process are as follows. An Adjudication Officer is not a lawyer; they are not empowered to take evidence on oath or affirmation; hearings must be held in private; their determinations are not directly enforceable, requiring application to the District Court; an appeal from a determination of an Adjudication Officer lies only to the Labour Court, also composed of non-lawyers, where the hearing would be in public; but an appeal on a point of law only is to the High Court. At all stages, parties to a dispute are entitled to legal representation or a trade union/employers’ association official.

A Recent Judgment on the Irish Workplace Dispute Resolution System

In Zalewski v. An Adjudication Officer [2021] IESC 24, the applicant employee brought an unfair dismissal and notice complaint against his employer to the WRC. The respondent, an Adjudication Officer thereof, dismissed the complaint without any formal hearing, having made her determination on the basis of written evidence and submissions only. Unfortunately, the determination was reached and supposedly delivered on a day which neither party was aware of in advance. This occurred against a background where the applicant had expected to cross-examine witnesses of his employer. In addition, the reasons given for the decision were apparently extracted from documents submitted by the applicant’s employer. Unsurprisingly, judicial review proceedings were initiated shortly thereafter, the applicant arguing the the WRC was unconstitutional.

The Supreme Court, dividing 5-3, concluded that, while the WRC was exercising limited functions and powers of a judicial nature in accordance with the Constitution of Ireland, certain aspects of its procedures violated the applicant’s constitutional right to fair procedures. While not criticising the policy of “providing a cheap, relatively informal and efficient decision-making function, staffed by persons with expertise in the areas of employment law and with practical experience in industrial relations”, a majority of the Court nonetheless concluded that the general requirement to hold hearings in private, the lack of a power to take evidence on oath or affirmation and the absence of any punishment for giving untruthful evidence was unconstitutional. The applicant’s remaining arguments—that Adjudication Officers should be legally qualified, the absence of express provision in the Workplace Relations Act 2015 for cross-examination—were rejected. Specifically, the Court held it was sufficient that Adjudication Officers have some formal education in employment law, human resource management or industrial relations, without being qualified lawyers; and cross-examination was permitted even in the absence of any express reference thereto in the Act.

Concluding Comments

In general, the Supreme Court affirmed the constitutionality of the WRC and lauded its status as a “world-class” workplace dispute resolution system. Although the Court concluded that some of its procedures were constitutionally flawed, these findings largely stemmed from the Irish courts’ well-developed jurisprudence on the constitutional right to fair procedures, a right which applies in civil and criminal law contexts and has particular relevance in administrative tribunals. The Court’s affirmation of the “delegalising” agenda of the WRC is also significant. Without wishing to water down the significance of labour rights, taking lawyers out of highly-conflictual industrial and workplace disputes, where possible, is to be welcomed.

The Supreme Court finalised its order on 15 April 2021. However, the changes envisaged by the Supreme Court’s judgment to the WRC’s procedures have yet to be adopted by the Government of Ireland. On 4 June, Leo Varadkar TD, the Minister for Enterprise, Trade and Employment, stated that emergency legislation addressing the outstanding unconstitutionalities will be published in the next couple of weeks. It is hoped that this will indeed happen to allow the WRC to continue functioning as Ireland emerges from the pandemic.

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The CBAM Resolution

To avoid carbon leakage and achieve the climate commitments of the Paris Agreement, the CBAM has been chosen by the EU as part of the Green Deal. While its design and structure are still not known, the resolution provides valuable insights into the CBAM. The first question that comes to our mind is whether such a measure would be compatible with the World Trade Organisation (WTO) rules. Clearly, as an answer to this, the very title of the resolution includes ‘a WTO-compatible EU CBAM’, ostensibly an indication that the EU would like to respect international rules while implementing CBAM. Although this does not mean that the measure would fully fit in the WTO Rules, it is evident that the EU has been trying to build and enforce a CBAM compatible with the WTO Rules and the EU Free Trade Agreements (FTAs). On account of Article XX of the General Agreement on Tariffs and Trade (GATT), the WTO members can implement measures that are necessary to protect human, animal or plant life or health (paragraph b) or natural resources (paragraph g). On the other hand, in the resolution, the EU admits that it will accept a third country CBAM if it implements a higher carbon price (p. 4). The EU also stressed that the proposed measure should not be misused as a tool to enhance protectionism, unjustifiable discrimination or restriction (p. 5).

What will be its scope?

Since the GHG emissions from the imports to the EU have constantly been rising, though its domestic emissions have considerably reduced, the CBAM will monitor the GHG content of the imports (p. 5). The measure is expected to cover all imports of the products and commodities under the EU Emissions Trading System (ETS), including the power sector and energy-intensive industrial sectors like cement, steel, aluminium, oil refinery, paper, glass, chemicals and fertilisers (p. 6).

The different forms it can take

Ranging from tax instruments to mechanisms using the EU ETS, the proposed measure would complement by revising the EU ETS and not lead to overlapping and double protection of the EU industry (p. 6). In addition to the above measure, the European Commission is requested to propose more ambitious and binding norms and standards on products placed on the EU market to ensure low carbon and resource-efficient manufacturing. Therefore, as portrayed by the Inception Impact Assessment, some of the CBAM instruments ‘could include a carbon tax on selected products – both on imported and domestic products, a new carbon customs duty or tax on imports, or the extension of the EU ETS to imports’ (p. 2).

Possible effects on international trade

Under this system, the meaningful carbon pricing will reflect the carbon content of the imports (p. 6). We can identify the potential effects, from the resolution, for the different economies based on their development status. One could anticipate a special treatment for the Least Developed Countries (LDCs) and the Small Island Developing States (SIDSs) (p. 5). Hence, it may be favourable for the LDCs’ products that enter the EU without duties or quotas under the Everything But Arms (EBA) scheme. Contribution of the CBAM revenue to climate finance the LDCs and the SIDS, as proposed, will support them to develop clean and green technologies (p. 9). On the other hand, an ETS-equivalent charge will be applied to the imported goods’ carbon emissions of the EU domestic and foreign producers (p. 8). However, as the resolution only focuses on equally applying the measure to all the countries, except for differential treatment for the LDCs and SIDSs, it cannot be discerned whether the developing countries’ challenges will be considered.

Some changes that could be seen in the trade framework at an international level are as follows: First, keeping in mind the climate goals as the main guiding principles of trade policy, the Paris Climate Agreement will be an essential element in all future agreements, with a Trade and Sustainable Development (TSD) Chapter, of the EU. The FTAs might be adjusted for that purpose. Second, the EU’s trade and climate initiative at the WTO will intensify efforts to develop a global framework for carbon pricing, for instance, through the Environmental Goods Agreement. Indeed, the EU offers full support for establishing international CO2 pricing in line with Article 6 of the Paris Agreement. Third, the adopted trade strategy would require necessary climate diplomacy with other countries and subsequently lead to amendments in their respective climate policies.

In conclusion, the EU invites cooperation and concerted actions from all the countries to succeed in the globe’s climate neutrality. Considering the constraints of the inequivalent climate policies of the different countries and the prevailing economic inequality, the EU is expected to come up with a legislative framework that accommodates everyone. Whether the CBAM will measure up to its laudable goals will depend on the structure and design of the CBAM. An equally important question is whether the CBAM could satisfy the rigours of international trade rules under the WTO, especially relating to border tax adjustment.

James J. Nedumpara is Professor and Head of the Centre for Trade and Investment Law, Indian Institute of Foreign Trade, New Delhi;
Sathiabama. S is Research Fellow at the Centre for Trade and Investment Law, Indian Institute of Foreign Trade, New Delhi. The views expressed in this post are the authors’ own.

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Recital 36 of the Proposed Regulation mentions that “AI-systems used in employment, workers management and access to self-employment, notably for the recruitment and selection of persons, for making decisions on promotion and termination and for task allocation, monitoring or evaluation of persons in work-related contractual relationships, should also be classified as high-risk, since those systems may appreciably impact future career prospects and livelihoods of these persons”. It gives heed, very generically, to the potentially discriminatory impact of AI in the world of work and the risks it poses to workers’ privacy. Compared to the Draft Regulation, the final proposal also explicitly mentions self-employed and platform workers, to cover them regardless of their employment status. This is a step forward compared to the leaked Draft.

While classifying AI systems used at work as high-risk is appropriate, however, the Proposed Regulation is far from being sufficient to protect workers adequately.

Firstly, Annex III of the Proposed Regulation mentions: “AI systems intended to be used for recruitment or selection of natural persons, notably for advertising vacancies, screening or filtering applications, evaluating candidates in the course of interviews or tests;” and “AI intended to be used for making decisions on promotion and termination of work-related contractual relationships, for task allocation and for monitoring and evaluating performance and behavior of persons in such relationships”.

As just said, it provides that these systems shall be classified as high-risk and, therefore, subject to specific safeguards. At the same time, it specifies that the assessment of conformity of these systems to existing rules and safeguards will only be subject to self-assessment by the provider. This is, disappointingly, a lower level of protection than other high-risk systems that require stricter conformity assessment procedures through “the involvement of a notified body”. As already argued when commenting the Draft, given the extraordinarily severe consequences that AI systems at work can entail, and the particular nature of workplaces, where workers are already subject and vulnerable to their employers’ extensive powers and prerogatives, it is highly worrisome that this Proposed provision was not subject to any form of social dialogue at the EU level.

Moreover, the Proposed Regulation seems to take for granted that if AI systems used at work comply with the procedural requirements it sets forth, these systems should be allowed. The use of AI to hire, monitor (and, therefore, surveil) and evaluate work “performance and behaviour” is deeply problematic. Several EU national legislations ban or severely limit the use of tech tools to monitor workers. Moreover, Spain just introduced new rules granting algorithmic transparency at work. If adopted, the draft Regulation risks prevailing over these more restrictive legislations and triggering a deregulating landslide in labour and industrial relations systems around Europe. This is all the more serious because these national legislations often require to involve the trade unions and works councils before introducing tools allowing any form of tech-enabled surveillance and also partially ban this surveillance. The Proposed Regulation, instead, just like the leaked Draft, does never specifically mention the social partners and their roles in regulating AI systems at work.

If the Regulation is not corrected, the more protective national legislation risks being overcome by this EU instrument: this instrument, in other words, risks functioning as a “ceiling” rather than a “floor” for labour protection.

The Proposed Regulation also provides that high-risk AI systems must be built allowing the possibility of human oversight, something already included in the Draft. The Draft, however, provided that  people in charge of this oversight were to be put in the position, among other things, to “decide not to use the high-risk AI system or its outputs in any particular situation
without any reason to fear negative consequences.” Commenting on the Draft, I argued that it was problematic that it did not explicitly mention the need to provide managers and supervisors with the specialised training and powers to counter the specific implications of the use of these systems in the context of work. I also stated that, without explicit workplace protection, this provision may not adequately prevent disciplinary actions from employers.

The Proposed Regulation, however, does not even mention anymore the need to prevent the fear of negative consequences for the human supervisors who reverse or disregard the outputs of high-risk AI systems. In the context of work, this is certainly not enough to ensure effective human oversight!

These, again, are only some of the concerns that the leaked draft EU Regulation on AI raises about work and labour protection. It is extremely urgent for the social partners and labour experts to reflect and act on this instrument.

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On 10 March 2021, the European Parliament adopted its Report on Corporate Due Diligence and Accountability. This report provides a sense of the final shape of a future EU Directive. Under the proposed text, companies would be required to carry out due diligence strategies to assess and address the risks related to the operations of their global supply chains. The covered risks are threefold: human rights (e.g. forced labour, worker safety), the environment (e.g. ecosystem degradation, unsafe levels of hazardous products), and good governance (e.g. bribery of public officials in international business transactions).

The new rules cast a wide net, applying across all sectors of economic activity and to all firms that are either registered under the laws of an EU Member State, or that are registered outside the EU but nevertheless maintain operations within the single market. Rather than impose requirements on specific companies above a certain size, the EU law would bind all companies (albeit with less strict requirements for smaller enterprises).

Companies with cross-border operations will be conferred a duty of vigilance. According to Article 4 of the European Parliament’s report – the heart of the proposed legislative text – companies would discharge this duty by conducting risk assessments and publishing the results of these due diligence reviews. Even if the result of the review is that the company does not contribute to human rights, environmental, or good governance risks, then it must still publish a “statement in that sense”. The proposed Directive would thus introduce a comply and explain principle, rather than a comply or explain principle as currently applied in the Non-financial reporting directive; yearly reports will thus become a mainstay for European companies.

In order to complete these reviews, companies will have to assess the impact of their business relationships across their entire supply chains and ensure that their business relationships put in place policies in line with their own due diligence strategy.

Under the proposed legislation, if a company does identify a potential risk, it would be required to establish a due diligence strategy. This strategy should follow a prescribed series of steps similar to existing OECD recommendations:

(1) specify and categorize the identified risks;
(2) publicly disclose detailed, relevant, and meaningful information about the company’s value chain;
(3) establish a plan with measures that will be taken to respond to the risks;
(4) set up a prioritization policy in the case of several risks warranting response; and
(5) indicate the methodology followed for assessing these risks.

It is still unclear how exactly the EU will differentiate between various degrees of relationships within supply chains. For instance, is it reasonable for a parent company to be held responsible for the actions of a supplier to the second or third degree? The wording of the original version published by the European Parliament defined ‘business relationships’ as being along the “entire value chain” and these could be both direct or indirect. The wording was tightened in the version finally adopted: the definition of ‘business relationships’ is tightened by way of reference to a direct link to a company’s business operations. But while the new draft gives “due regard for commercial confidentiality”, companies would still be required to “map their value chain”, which “includes entities with which the undertaking has a direct or indirect business relationship”.

The proposed Directive will create heavy risks for non-compliance. Public enforcement is provided for through the designation of national enforcement agencies responsible for the monitoring of companies’ due diligence implementations. Private enforcement would be rendered possible through the modification of the rules of civil liability. The report further proposes a modification of Europe’s private international law regime, changes which could amount to a small revolution as parent companies could be more easily held liable for damage caused by subsidiaries in third countries. A future increase in human rights litigation is thus highly likely.

The European Commission, which now must produce a formal legislative proposal, has already signaled its willingness to make human rights supply chain due diligence an important part of its new open, sustainable, and assertive trade policy.

However, uncalibrated due diligence obligations risk obfuscating the complex realities of today’s global supply chains. That the EU would use its globally trading companies as vectors for a value-based external policy has as a necessary consequence that these same companies may be caught in the crossfire in a climate of heightened potential for global economic conflict, as companies such as H&M have recently experienced. Furthermore, the extra burden imposed on Europe’s SMEs would appear to be unworkable. Thus, Murphy’s law that anything that can go wrong will go wrong, is likely to materialize once more as a result.

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Fifth-generation wireless systems – commonly known as 5G – are a big leap forward for mobile communications.  The innovations connected to 5G could be worth around $13.2 trillion over the next 15 years for the industry and public sector.  By 2025, deploying the new technology could generate €213 billion in revenue in Europe, mainly in the health, energy, transport and automotive sectors, according to the European Commission’s plans.

The International Telecommunication Union says 5G will mostly impact three areas: mobile broadband, where it enables emerging services like virtual or augmented reality; massive machine communications for the Internet of Things, the web of internet data exchanges among devices, with no human involvement; and ultra-reliable low-latency applications like self-driving vehicles or robotic surgery, which cannot function without large and stable data communications.

Demand for 5G networks is growing even faster in the Covid-19 world, where working remotely has become the norm and there has been a demographic shift away from city centers.

Regulators must ensure efficient spectrum use without harmful interferences.  This is key to meet the booming demand for the new wireless services without endangering their essential high quality, but, as usual, technology develops faster than regulation.

The origin of spectrum licenses

Since the first radio communications, it became clear that spectrum is a scarce resource that must not be overcrowded, but not many people remember that the proverbial Titanic shipwreck accelerated spectrum regulation.

In 1910, as the US Secretary of the Navy wrote to the US Senate, “calls of distress from vessels in peril on the sea” were routinely “unheeded”, or “drowned out in the etheric bedlam”.  “Amateurs” clogged up the frequencies.  “[M]ischievous and irresponsible operators” were taking “great delight in […] sending out false calls”.

Two years later, the call for help from the sinking Titanic reached a telegraph station in Newfoundland.  Amateur radio operators – flooding the airwaves to follow the unfolding situation – reportedly prevented the distress signal from travelling further.  The ensuing tragedy provided impetus for the adoption of the 1912 Radio Act, which required all aspiring broadcasters to obtain licenses and only use their assigned frequencies.

Spectrum regulation advanced in large strides afterwards.  Today, spectrum policies routinely include algorithm-based nationwide auction procedures.  They allocate licenses for 5G spectrum usage rights on an exclusive basis.

However, the quest for the optimal auction design is still ongoing.

Market-based auctions

To accelerate the launch of 5G services, the EU has pushed strongly for the rollout of pioneer spectrum bands.  A common deadline was established for EU countries to make available the 700 MHz, 3.6 GHz and 26 GHz bands, under harmonized technical conditions of use.  Italy first assigned all of the pioneer bands, fetching a record €6.55 billion at the auction in 2018.  Currently, 21 EU countries have licensed out at least some part of these spectrum bands.

Spectrum auctions must optimize the use of scarce resources to deliver maximum value.  This should be done in an objective, transparent, proportionate and non-discriminatory manner.  Auctions must promote – or at the very least not hinder – effective network rollout, but also service quality, innovation, and the development of competitive markets.  They must also help EU countries to coordinate the use of radio spectrum and establish pan-European networks.

How can auction design help to achieve all these goals?

In the 1950s, Ronald Coase argued that competitive auctions are the best way to allocate broadcasting licenses.  Auctions naturally select market players who can make the best use of scarce resources because they are willing to pay more for them.  Auctions help governments maximize revenues extracted from their natural assets, without having to run businesses themselves.

Regulators in Europe widely use competitive auctions.  An example among many is the emission allowance auction scheme under the EU plan to be climate-neutral by 2050.  This auction scheme helps in curtailing global warming by allocating the right to pollute only to those who can offer more.

Beauty contests, on the other hand, can provide more flexibility to select licensees according to other criteria, different from price.  However, a troublesome trade-off is that government officials may enjoy too much room in picking winners, replacing market dynamics.

The winner’s curse

The winner’s curse is a recurring menace in competitive price auctions, which was initially identified in the awards of offshore oil-drilling leases.

Bidding choices depend only partly on a bidder’s own features, like experience, available funds and technology, cost structure and synergies.

Many other strategic factors also matter, which are common to all bidders.  Not least, those relating to the potential for market exploitation of the auctioned-off item.  Bidders usually need expert appraisals to understand how competition will unfold, or the likely evolution of technologies and regulation.

Normally no single set of accurate information is available on these matters.  As a result, each bidder will have their own views and insights.  However, none of them will know exactly what the award is worth.

Winners might prevail because they are better positioned to exploit the win or because they are more insightful, or it could happen that other competitors placed lower bids because they knew something that the winner ignored, and which substantially affects the market value of the prize at stake.

This is the winner’s curse.  The winner realizes that it has overpaid for the award, making a loss on the transaction.

Irrational or unlucky bidders have to live with the consequences, but the mere existence of the risk of overpaying can doom auctions to failure and defeat the regulator’s goals.  Uncertainty may cause competitors to underbid or to not compete.  Cursed winners could also try to recover losses by raising service prices to the detriment of consumers and innovation.

The impact on spectrum auctions

These dynamics, which may frustrate the regulator’s purposes in launching auctions, also affect the award of spectrum licenses.  Doubts over technology, over consumer demand for the new communication services, or over the outcome of future auctions for similar licenses, can have a deep impact on bidding strategies.

For instance, when frequency bands are offered on a regional rather than national basis, the value of single regional licenses for operators active nationwide will be less, if they do not manage to also get licenses for the other regions in which they operate.

The operator would not know in advance the outcomes of future auctions.  Therefore it would be hard to predict how much it should pay for the license.  Where a combinatorial element is central, a bidder may wind up over-investing in an incomplete collection of licenses, which lose their value if the complementary licenses become too expensive or unavailable.

The scenario worsens when complementary spectrum auctions are infrequent.  Bidders have the additional daunting task of predicting future demand trends over longer periods.  This is much more complicated in emerging markets or with developing technologies, like those combining artificial intelligence and 5G.

This is why regulators have been keen to find a cure for the winner’s curse.  This would encourage more courageous yet balanced bids.

The Nobel-prize cure

Paul R. Milgrom and Robert B. Wilson found a solution.  They dedicated much of their work to advancing the understanding of auctions and won the 2020 Economics Nobel Prize “for improvements to auction theory and inventions of new auction formats”.

Borrowing many analytical tools from game theory, they came up with a new format in 1994.  Together with Preston McAfee, they developed a simultaneous multiple-round auction (“SMRA”) model for the US Federal Communications Commission.  This is now standard practice in spectrum auctions around the world.

SMRA is an ascending auction for multiple lots at once.  It allows bids for every available segment of the spectrum in a number of rounds.  After each round, some information about prices is revealed allowing bidders to re-evaluate their strategies in light of the results.  This additional certainty about the true value of the award encourages participants to not discount their offers.  When there is no additional demand for any of the lots, allocation begins.

Defeating the winner’s curse, the new format grants fairer and more efficient outcomes.

The trouble with record auctions

Ensuring constant improvement in the design and practice of spectrum auctions, however, remains crucial.

Modern auctions can still lead to suboptimal outcomes, for instance, when they maximize frequency price leaving participants with not enough resources to invest.

Many national regulatory authorities—in order to raise state revenues—actively try to extract rents from operators.  This may be an acceptable objective, but it could conflict with other primary public goals.  These include encouraging network investment and creating stable competitive markets.

Historically, telecom industry researchers considered very high spectrum license fees unrecoverable, inescapable sunk costs, with no impact on operators’ investments and pricing.  They basically thought that extracting maximum income from spectrum auctions was a risk-free operation without downsides for consumers.

Recent studies in financial and behavioral economics show differently.  Companies do not disregard sunk costs when making decisions on investment and pricing.  On the contrary, high upfront input costs can lead to a steep reduction in network investment and price competition.

This is known as the hold-up phenomenon.  Above-market spectrum awards cut down winners’ profits, which normally ensure return on network investments already made.  In the long term, companies respond to profit-cutting by lowering their expectation of returns on future investments.  This in turn reduces overall network investment, including future bids.  Inability to invest might even lead companies to market exit or consolidation.

In a 2017 Study on Spectrum Assignment in the EU, the European Commission found indeed a correlation between high auction prices and poor 4G network availability, reflecting insufficient network roll-out.

Therefore, the financial upside from obtaining artificially high award prices can be evened out by risks of future auction failures.  It can also generate downstream inefficiencies resulting in lower quality, more expensive, services.

The path forward

The EU lacks a widely accepted price-setting methodology that encourages efficient spectrum use.  But several pro-competitive clauses in tender rules can moderate the negative effects of price auctions.  Regulators should not abuse these clauses to pick winners.  They should be checked against a thorough market review and introduced only if there is evidence of market dominance.

Boosting competition

Spectrum caps restrict the maximum amount of spectrum a bidder can buy.  They can concern a single band or a group of bands.  Or they can be symmetric for all bidders or asymmetric with a tighter or looser cap for certain bidders.  These clauses prevent anticompetitive spectrum hoarding.  They may also lead to more competitive markets, with a higher number of licensed players.  However, setting caps too tightly can jeopardize an operator’s ability to provide improved coverage.

Wholesale access obligations facilitate market entry of mobile operators or non‑telecommunications niche service providers, encouraging retail competition.  They involve duties imposed on licensees to offer wholesale third-party access to the awarded spectrum.  However, they are not appropriate in all circumstances.  There should be clear market evidence that they are needed, for instance, when the licensed spectrum is an essential facility, whose use cannot be exclusively reserved to the winner.  Otherwise, parties should negotiate wholesale access with competing providers on commercial terms.

Reservation clauses reserve spectrum for certain bidders or groups of bidders, e.g., new entrants or providers of niche services different from electronic communications.  Lenient minimum coverage obligations or a right to national roaming are helpful measures for these special categories of market players.  For example, incumbent operators that acquire spectrum may be required to offer national roaming to new entrants on FRAND terms.

Finally, the use of coverage obligations may stimulate investments.  They should not lead to inefficient duplication of networks in non-profitable areas.  Nor should they be so wide or unreasonable as to discourage bids from well-qualified applicants.  Licensees should be allowed to meet coverage obligations using the most efficient combination of bands.  Especially as 5G leverages multiple bands to provide optimal services.

Sharing the airwaves

Stakeholders are also increasingly turning to emerging spectrum sharing possibilities to meet growing demands for wireless connectivity.  Sharing solutions could help unlock opportunities for new applications, including 5G networks and the Internet of Things.

Many tender rules aim to ensure efficient spectrum exploitation through sharing mechanisms.  “Use-it-or-lease-it” clauses provide that operators can use the frequencies in bands that are not used by the licensees.  Club use clauses allow licensees to use all the awarded spectrum, in areas where frequencies are not used by others.  Spectrum sharing models allow independent users or devices to access the same range of frequencies under certain conditions.

Conclusions

Optimal auction design has come a long way since the Titanic shipwreck.  Nobel prize winners have contributed to finding ingenious solutions to problems like the winner’s curse.  Regulators increasingly test their solutions.  They try to find an optimal balance between conflicting public goals.  Such as maximizing state revenues without discouraging network investment and competition.

However, there is no secret recipe for the best spectrum auction.  There are a number of potential solutions, whose effectiveness should be checked on a case by case basis.  In any event, it is important to ensure that procompetitive tools do not become enablers for market manipulation.

5G could have a huge social and economic impact globally, and be a core enabler for industrial transformation.  It is up to the regulators to unlock this tremendous potential through careful auction design.

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It is unclear whether telework/remote work will be taken up (where feasible) in a significant manner once businesses more widely re-open. The question of continued use of office space (as well as in what capacity and size) has been posed and widely noted in newsmedia with attention-grabbing numbers. The Confederation of British Industry (CBI) and Pwc conducted a survey that was the source of these news reports. It found that in the financial services industry, 40% of organisations believed that almost all their staff (90%) could work remotely. 88% in the industry were revisiting their office space needs, with 57% seeking to reduce this space.

What does telework/remote work mean? How many people are doing this?

There has been a problem with nomenclature. The UK’s Office for National Statistics (ONS) found that 1.7 million individuals worked mainly from home in its survey of work in 2019. The ONS data is not a complete picture of the extent of teleworking. Teleworking did not necessarily mean working from home. Teleworking included the self-employed whose home residence doubles as an office. It was also understood as working from a location other than an employer-provided office. The figure does not include those who may work partially at an office and partially at home. Further complicating obtaining a clear sense of telework is that these figures also include farmers (who would work on the land adjacent to their homes) as well as shop owners who may live adjacent to their stores.

And so, 1.7 million people working mainly from home in the calendar year 2019 is a gross figure. Although there has been an upward trajectory since 2015, the figure has moved from around 4% in 2015 to just above 5% of the total workforce in 2019. The ONS figures seem to be at the low end of other estimates. In 2018, an estimate was 13.7% of individuals working from home.

In February 2021, the UK Government announced a ‘roadmap’ out of the lockdown. Soon after this statement, figures from the last week of February showed a gradual decrease in the number of adults who reported working exclusively from home. 32% in the week of this release which was down from mid-February’s 37%. By the 6 April 2021 release, 53% of working adults reported leaving home for work.  

Are some industries more amenable to telework/remote work?

The ‘intensive use’ of information and communications technologies, reading, and writing skills render teleworking more feasible. Certain industries are more amenable to teleworking. Accommodation and food services would be one sector with fewer opportunities (with 10% of that workforce reporting working from home). During the pandemic, the information and communications as well as professional and scientific sectors both had about 50% working from home,including one-third of employees in the information and communications sector doing so during a 2019 study.

Workers who have the tools and a higher skill set (obtained through tertiary education and/or through higher qualifications) have been more likely to telework. Coupled with a higher skillset, flexibility in the performance of work is another characteristic which facilitates telework. This cohort was also more likely to have a higher household disposable income. The opportunity to telework decreased for workers who did not possess tertiary education and who had lower numeracy and literacy skills. Despite teleworking, younger workers seem more susceptible to a reduction in hours worked, earnings, and to have experienced changes to work attributable to caring commitments.

Demographics relay a more precise articulation of who teleworks. Age factored into teleworking. Those aged 40-49 comprised the bulk, with a crescendo to and decrescendo from this age cohort. Gender has been a particular area for consideration with regards to the pandemic. There have been more women employed in critical (nursing, grocery stores) and locked down sectors (tourism and retail) than men. There have been reports that the lock down and forced teleworkhas predominantly negatively affected women more than men.

An argument for why the sun has not set for the office

Rethinking office space is not new. ‘Hot-desking’ has been a strategy for managing office space needs that predates the pandemic.

Information on pre-pandemic ways of managing the workforce suggest some bases upon which telework may not become a widespread part of operations. Moreover, it is questionable whether the experience with teleworking due to the pandemic will significantly displace the presumption of the workplace where the employee works at the employer’s premises.  

Employers’ scepticism of remote work

A will to permit telework (as opposed to capacity to telework) may be the deciding factor for telework. The most formidable obstacle may be the belief that employees perform better when in an office where they may be overseen.

The bases for denying requests when flexible work arrangements were available to employees are likely to remain persuasive even after alternative work arrangements due to the pandemic. The Workplace Employment Relations Study of 2014 (WERS) (which investigated the years 2004 to 2011) showed that, of the constraints to providing flexible work, ‘incompatibility with the nature of the work or the operating hours’ was the most common basis, accounting for around 53% of employers, with pressure placed on other staff the second-most used basis at 30%. WERS also found that managers’ views of balancing work and family responsibilities (at the time of this study family responsibilities were the most prevalent basis for requesting alternative work arrangements, largely attributable to the law not changing until 2014) hardened. In 2004 66% of managers took this view. By 2011, 77% had this perspective, with these managers accounting for 70% of all employees. In this same study, working from home represented 17% of flexible work arrangements. The Chartered Institute of Personnel and Development’s (CIPD) survey of 2016 found that the nature of employees’ work (the reason for 27% of responding employers) persisted as an obstacle to flexible work arrangements. Even with around 20% of national employers suggesting the government should encourage employers to permit employees to work from home, the negative attitude of 15% of responding managers stands as an unfortunate indication that a stigma around flexible working may remain. Part-time work was by far the most common form of flexible working (62%) provided by employers, followed by flex-time (34%), and working from home on a regular basis (24%). Working from home seemed to be associated with attaining a middle or senior management position. 

When asked how government should reduce commuting time and cost, 20% of employees suggested encouraging employers to permit employees to work from home. 40% (the highest single response) recommended a reduction in public transport fares.

The gig economy’s influence on constant surveillance

Another consideration, the ‘gig economy’ cases convey a remarkable preoccupation with control over the workforce. Control has been one of the oldest tests for employment status in the UK (Yewens v Noakes (1880) 6 QBD 530). While it predated the gig economy rulings, the UK Supreme Court in its 2011 decision of Autoclenz v Belcher offered a concise statement on this factor, situating it within the context of the imbalance of bargaining power. This decision was instrumental in the English Court of Appeal’s 2018 ruling in Uber bv v Aslam. The exertion of control over drivers in Uber was also a prominent point in the UK Supreme Court 2021 decision in Uber bv v Aslam. Indeed, the French Court of Cassation (Labour Chamber)’s 4 March 2020 decision also noted the subordination of Uber drivers, betraying an assertion that they are independent contractors.  

These references suggest that even now when business models actively engage in regulatory arbitrage (with regards to employment regulation), a core aspect remains these entities’ efforts to retain a remarkable amount of control over the services provided. Unless there is a cost-effective way of easily retaining control of employees or overseeing them outside of the office, it may be unlikely the office will fall into disuse when the pandemic has subsided sufficiently.

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