Hotels and restaurants have slammed a suggestion by Siptu that the Government should scrap the 9% Vat rate for the sector as "reckless" and "irresponsible".
The union has claimed that the financial benefit of the reduced Vat rate for the sector has not been passed on to either employees or the exchequer.
Siptu also said employers in the hospitality sector had refused to participate in talks for the creation of a new joint labour committee (JLC) to set fair pay rates and conditions for employees.
Siptu has called on Finance Minister Michael Noonan to withdraw the reduced Vat rate unless employers in the sector agree to engage in talks for a new JLC for the sector.
The previous JLC mechanism for setting wages was struck down by the Supreme Court in 2011, but the Government has since put in place new legislation to restore wage deals in the sector.
President of the Irish Hotels Federation Stephen McNally said the reduced Vat rate was one of the most successful job creation initiatives in modern times, helping to create more than 33,000 jobs.
“The measure is yielding real results and benefits on the ground with almost three quarters of hotels and guesthouses hiring additional new staff in the last year alone,” he said. “For Siptu to now call for its withdrawal is nothing short of reckless given the number of livelihoods that depend on Irish tourism. It’s time for Siptu to act responsibly and stop jeopardising jobs.”
Mr McNally that while the tourism Vat rate supports employment growth, the reintroduction of the JLC system jeopardises jobs by creating counterproductive inefficiencies and rigidities into the Irish labour market.
The IHF president also said the system had “lost all relevance” since the introduction of the National Minimum Wage Act, which gaive Ireland one of the highest gross minimum wage rates in Europe.
Adrian Cummins, chief executive of the Restaurants Association of Ireland, said Siptu’s call was “nonsensical” and showed the union was detached from reality. “This call to reverse the Vat rate is directly hindering the creation of 50,000 jobs by 2020 which will be possible if the Vat rate is kept at 9%,” he said.
Mr Cummins said that, since its introduction in 2011, the 9% Vat has created 23,324 direct jobs and 10,728 indirectly. He also pointed out that Irish restaurant staff are on the highest wages in Europe with a 38% turnover.
Ireland South MEP Deirdre Clune said the Siptu proposal would cost jobs in the tourism sector, while Independent TD for Dublin South–East Lucinda Creighton said the union had “lost the plot”.
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