The Government has announced the establishment of an independent review of statutory wage setting mechanisms known as Employment Regulation Orders (ERO) and Registered Employment Agreements (REA).
EROs set minimum wage levels and other terms of employment above and beyond the national minimum wage in sectors such as retail, catering and hospitality.
The review, announced by Enterprise Minister Mary Hanafin, is in line with the Govt’s four-year National Recovery Plan, 2011 – 2014 and is also a commitment under the provisions of the joint EU-IMF Programme for Ireland.
The Government has requested that the review be completed within approximately six weeks from February 25, the closing date for submissions from interested parties.
It will be conducted jointly by Labour Court chairman Kevin Duffy and UCD economics lecturer Dr Frank Walsh.
“We need to ensure that statutory wage fixing mechanisms work effectively and efficiently and that they do not have a negative impact on economic performance and employment levels,” Minister Hanafin said.
“I would strongly urge all interested parties, including those who are party to these mechanisms and agreements, to avail of this opportunity to submit their views to the independent review team on the continued relevance, fairness and efficiency of the current ERO and REA mechanisms.'
There are currently 68 REA agreements registered with the Labour Court. The REAs which are the most significant in terms of the economic sectors and number of workers covered are those that apply to the construction and electrical contracting sectors.
Employers' group IBEC said the review provides an important opportunity to carry out much-needed and far-reaching reform of the labour market, and said how the review findings were handled would be a key test for the next government.
"The current system is at odds with the economic needs of the country," IBEC director Brendan McGinty said.
"Many of Ireland’s regulated wage rates are too high by international standards and are a major stumbling block to regaining competitiveness and creating jobs.
"Major reform, along with the recent reduction in the minimum wage, is needed if we are to create new jobs and get people back to work."
Ian Talbot, Chambers Ireland Chief Executive said: “This review of the framework of statutory wage setting mechanisms is long overdue.
"The abolition of ERO’s and REA’s, combined with the reduced National Minimum Wage from February 1st will help support competitiveness across the economy.”
“The short time frame envisaged for the report is also welcomed but speedy implementation of recommendations will be crucial and the incoming Government and the Department of Enterprise must deliver,” Talbot concluded.