Representatives of the country’s largest employers’ body, IBEC, met the European Commission officials that are dealing with the terms of Ireland’s loan agreement to win their support ahead of the Government releasing its proposal later this month
Brendan McGinty, IBEC director of industrial relations and human resources, said the proposals of Enterprise Minister Richard Bruton do not go far enough. The minister has said he does not want to abolish the Joint Labour Committee (JLC) system that sets rates for these sectors though he has promised to reform it.
“If we are serious about economic reform you cannot do it without addressing a whole range of factors, including improving our cost base,” said Mr McGinty.
Payroll costs amount to 42% of turnover compared to 32% in the North and overall, given an average premium of about 37% compared to the minimum wage in Britain, he added.
Mr McGinty argued that abolishing the JLC system could lead to the creation of 4,000 jobs in the catering sector and 21,0000 in hotels. The system was abolished in Britain in 1993 but even if it was abolished in Ireland now people with premium payments would still be paid according to their contracts of employment.
He believed sensible arrangements could be put in place at local level by agreement between employers and their employees on changing the conditions of their employment.
“This has to be handled sensibly and pragmatically. Lets take the hard decision to eliminate this and we wanted to make sure that the Troika understands the effect of some of the steps being contemplated... We want to influence the key stakeholders.”
However, SIPTU’s John King described IBEC’s visit to Brussels and its mission as “shameful”. The vast majority of submissions to the Duffy Walsh report on JLC wage-setting mechanisms came from employers but IBEC wanted the Government to go further than the report’s recommendations.
“The report showed that cutting the income of the lowest-paid workers covered by the JLC will have no effect on sustainable job creation or retention. These sectors are suffering from a lack of demand and cutting wages would be counterproductive with even less money for consumer spending,” he said.
SIPTU services division vice-president Margaret Coffey said: “Bruton’s statement that the changes will only affect new entrants is an ineffective smokescreen and workers see through it. They will lead to an immediate attack by employers on the incomes of existing workers and will lead to extensive displacement of existing workers in favour of new entrants.”
Retail Excellence Ireland, whose members employ about 110,000 people, said that according to a survey they carried out indicated that close to 43,000 vulnerable jobs could be saved and almost 32,000 more could be created if the labour market restrictions were abolished.
They also warned that abolishing the upward-only rent reviews was essential as high and increasing rents were the cause of a very large number of retail business failures over the past three years.