Employers see benefits and costs in new workers' rights

Companies will look at both opportunities and challenges with Statutory Sick Pay Bill 2021, the EU Directive on Adequate Minimum Wages and the Gender Pay Gap Information Act 
Employers see benefits and costs in new workers' rights

Brendan McGinty, strategic policy advisor to the Employment & Recruitment Federation (ERF) and managing partner at Stratis Consulting.

Imminent new laws around employment at once promise more effective collaboration between employers and employees, while they also risk making Ireland less competitive, says one industry leader.

Brendan McGinty, strategic policy advisor to the Employment & Recruitment Federation (ERF) and managing partner at Stratis Consulting, sees increasing opportunities for employees in specialist trades skills, as well as in digitalisation and green economy skills.

However, he also anticipates employers facing significant labour market challenges and changes to pay and conditions. Among the changes on the horizon are the Statutory Sick Pay Bill 2021, the EU Directive on Adequate Minimum Wages and the Gender Pay Gap Information Act 2021, signed off last July and soon to be implemented.

“Ireland is practically at full employment again and, as a result, we are seeing widespread labour shortages and growing attrition issues,” said Brendan McGinty. “Higher inflation may now be embedded for a longer period than was hoped, and, yet, any wage inflation spiral, should it emerge, will risk making Irish industry uncompetitive and, at a minimum, may jeopardise the fragile recovery many businesses struggled to secure post-Covid.” 

EU unemployment of 6.24% represents an all-time low. France, Spain and Ireland have had a faster recovery than others and, in Ireland, unemployment is now down to 4.8%.

“Current challenges in attracting talent include the effects of the pandemic, resulting in a surge of remote working, an unprecedented level of resignations, the pursuit of job transfers, and skill shortages in a growing number of sectors,” he said.

The ERF has advised the Government to prioritise investment in third level skills, digital skills and support for both climate change and sustainability-related skills.

It also highlights the need to incentivise reskilling of lower-skilled groups, while noting that Skillnet Ireland is already working with employers to identify the talent development needs of business.

Specialist trades skills, plus digitalisation and green economy skills, are all areas where reskilling opportunities need to be more effectively promoted.

Mr McGinty adds: “We know that workers’ rights will receive a boost in 2022, with various employment regulations due to be rubber-stamped by Cabinet.

“The right to request remote work or flexible work options means employers must solidly examine employee terms, and, where a business is unable to accede, to justify a case if a worker’s request is turned down.

“So too, the Statutory Sick Pay Bill 2021, signed off in March by the Cabinet, will introduce new employee rights which will increase employer costs for most businesses.” 

The proposed new law will make it mandatory for employers to offer minimum pay for absence leave of up to three days, with sick pay at a rate of 70% of an employee's wage, subject to a daily maximum of €110.

Whilst the legislation will be finalised by the Oireachtas in the next few months, this entitlement is due to increase gradually, up to 10 days of sick pay, in the next few years.

The ERF cautions that this initiative will place additional burden and costs on employers at a time of peak uncertainty.

Meanwhile, the draft EU Directive on Adequate Minimum Wages could see the ‘Living Wage’ become a reality in 2022. In Ireland, this equates to €12.90 per hour, up 60c per hour (4.9%) over the 2020/21 rate of €12.30.

“The Living Wage doesn’t take account of the employer’s ability to pay,” said Mr McGinty. “The statutory National Minimum Wage also increased to €10.50 on 1st January 2022, following Budget 2022.

“Significantly, the Government has asked the Low Pay Commission to look at the design of a ‘living wage’ for workers in an Irish context. But, it is currently unclear if this would be on a statutory or non-statutory basis, if such a measure was to be introduced.” 

Mr McGinty also notes that the Gender Pay Gap Information Act 2021 will soon require many private and public sector employers to publish information relating to their gender pay gap. Where there is a gap, they will need to explain why there is a gap and what measures are being taken to reduce it.

In a similar vein, March 2021 saw the European Commission issue its proposal for a Directive on Pay Transparency, the objectives of which are aligned to the European Pillar of Social Rights.

“Equal opportunities, inclusion, equal pay between men and women, and pay transparency are, of course, essential and key elements of modern, dynamic labour markets, and are promoted by the Commission,” said Brendan McGinty.

“However, employer bodies, including the WEC (World Employment Confederation-Europe), are concerned about aspects of the new Directive, including its scope.” 

Practical, financial, and administrative impacts, especially on SMEs, have also been highlighted, and member states have asked for clarifications regarding the provisions of the directive and the link to the right to equal pay.

“Currently, in Ireland, there are a dozen or more pieces of new employment legislation on the table, originating at either EU or Irish Government level,” he said. “So, one thing is certain; more regulation is on the way for business owners to be concerned with, and, as a result, both ways of working and terms of employment will change.

“It is abundantly clear that technology, economic instability, geopolitics and the consequences of the Russian war in Ukraine, as well as skill shortages, the impact of climate change, and even viruses, may all determine what is ‘going to work’ for future generations.

“And, yet, at least in the near term, with constructive engagement at enterprise level, the adoption of innovative approaches, and even more effective collaboration, there is every chance we will find a solution that just might work for everyone!”

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