SIPTU: ‘Inability to pay’ law will lead to huge job losses

NEW Government legislation allowing companies to claim inability to pay staff the minimum wage applicable in their sector will lead to major job losses and an end to decent wages, the country’s largest trade union has claimed.

Within weeks the Government looks set to introduce the legislation permitting employers who can prove financial difficulty to opt out of the wage minimums set by registered employment agreements (REAs) and employment regulation orders (EROs) in their industry.

REAs and EROs apply in a number of industries including construction and catering. Often the legally-binding base pay rates are above the national minimum wage of €8.65 per hour.

The Department of Enterprise, Trade and Employment has said that in order to save jobs it wants to allow companies in difficulty to claim inability to pay through a standard process.

Under the mechanism, it is proposing the Labour Court would examine the books of the employer and decide whether its claim of financial difficulty was valid and a relaxation of the rate was warranted.

However, SIPTU national industrial secretary Gerry McCormack said the move will create more problems than it will solve.

“This has huge implications for the industries concerned,” he said.

“Take companies who have to put in a bid for a contract in security. If one of them has an exemption for a year to take a euro per hour off the rates of pay, they are going to completely undercut the market. You are going to have huge job losses in the decently-paid jobs. Any of the employers who are decently paying their staff are going to be wiped out across all those industries.

“We met with [Junior Enterprise] Minister [Dara] Calleary before Christmas and were given an undertaking that they would consult with us and give us an opportunity to make a presentation to the Oireachtas committees and whoever was necessary to give our view. They have simply set that aside and have decided to press ahead and do it without even talking to us.”

Fine Gael was also critical of the Government’s plans. “Junior Minister Dara Calleary has flunked the challenge to reform the Labour Court’s outdated and cumbersome wage setting system,” said the party’s employment spokesman Leo Varadkar.

“It is costing us jobs in hotels, restaurants and the retail sector. It penalises honest employers and often prevents employees from working when they are willing to do so.

“FG will support the inclusion of an inability to pay clause, but we fear the Labour Court will be inundated with thousands of businesses claiming inability to pay. It will cause the whole system to collapse. We should just reform it now.”

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