Enterprise Minister Richard Bruton has denied that proposals to cut the pay of low earners would cause a rift between the coalition partners.
Minister Bruton said wage-setting mechanisms needed to be radically reformed to create competitiveness.
The Fine Gael minister said he had to come up with a fair and balanced set of proposals that would be in the interest of creating employment.
The plans to reduce overtime and Sunday premiums under employment regulation orders would affect some 200,000 workers in service areas like hotels, catering, hairdressing and security.
“I don’t believe there will be a rift between Labour and Fine Gael,” said Mr Bruton.
“I think all parties have recognised that this is a system that needs to be reformed.
“We are now moving to do that and the reason we are doing that is to protect employment, to protect employment in sectors that have lost more than 25% of their workforce in the space of three years.”
Joan Burton, Labour’s minister for social protection, acknowledged there has to be reform but stressed that if incentives to work are reduced, more people will lean on social welfare.
Mr Bruton plans to discuss the findings of an independent review with unions and employers by June 10. An action plan will be brought before Cabinet in the second half of next month.
Retailers have welcomed proposals to phase out Sunday premium payments but urged government to go further and abolish the Retail Joint Labour Committee (JLC).
Retail Ireland director Torlach Denihan said: “The Retail JLC is costing the sector approximately €30m annually and is a cause of job losses.
“The Retail JLC has persisted in imposing pay increases at a time when 50,000 retail jobs have been lost and shops are struggling to remain open. It is destroying jobs, is unnecessary because of the national minimum wage and should be abolished.”
But opposition parties have raised concerns about the future of worried low-pay workers.
Fianna Fáil’s enterprise spokesperson Willie O’Dea called on the Government to publish its proposals immediately to provide clarity for thousands of concerned workers.
“At a time when workers are genuinely concerned about their pay and conditions, the least the Government could do is offer some clarity on the situation,” he said.
Senator David Cullinane, Sinn Féin’s spokesperson on workers’ rights, said cuts in pay or social welfare are counterproductive and damaging to the economy.
“Reducing the spending power of 300,000 workers will result in a drop-off of consumer spending and will further hurt service, retail and hospitality sectors,” he added.