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The EU Agency Workers Directive was introduced in 2011 and grants rights for equal pay and conditions for agency staff after 12 weeks. However, under a loophole known as the ‘Swedish derogation’, it has been perfectly legal for companies to pay agency workers lower wages if they are on contracts with an agency and paid in between assignments.

 

Mr Miliband claimed that ‘high levels of low-skilled migration’ is making the cost of living crisis worse.

 

‘Unless we act to change our economy, low-skill immigration risks making the problems of the cost of living crisis worse for those at the sharp end. It isn't prejudiced to believe that,’ he said.

 

‘The next Labour government will work with British business to close this loophole and ensure that agency workers cannot be used to undercut non-agency staff,’ he added.

 

 

The Confederation of British Industry (CBI), which represents 240,000 companies of every size, claims that closing the loophole could damage the economy.

 

‘Undermining this flexibility would put the very system which has kept unemployment down at risk,’ said Katja Hall, the CBI's chief policy director. 

 

‘The agency directive was not welcomed by business, and further gold-plating of EU rules can only cost jobs.’

 

 

The Recruitment and Employment Confederation (REC) branded Miliband’s proposal as ‘wholly misleading’, saying that it has nothing to do with immigration. 

 

Chief executive Kevin Green said: ‘These arrangements are part of the 2010 agency workers regulations that were agreed following consultation between the last Labour government, business and the unions and apply to British and non-British workers.’

 

‘Workers on PBA contracts are employed by their agency on a permanent basis, giving them greater security and all the benefits that come with permanent work such as protection from unfair dismissal, maternity leave and statutory redundancy pay. Is the Labour party really saying they want to deny British temps the option of permanent employment?’

 

Labour has also proposed increasing fines for companies that do not obey minimum wage legislation, banning recruitment agencies from having have a policy of hiring exclusively foreign workers and ending the use of ‘tied housing’, a practice which allows agricultural businesses to pay less to workers who are given accommodation as part of their role.