Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I am delighted to join members for my first time before the committee and pleased to present to the committee a draft SEO for the construction sector. The draft order is proposing to amend the previous SEO made in 2021, which in turn amended the SEO made in 2019, by confirming new minimum rates of pay, pension and sick pay entitlements for workers in the construction sector. This order, if approved, will be the fourth of this kind. The construction sector has had three previous SEOs in 2017, 2019 and 2021.

Before speaking about this SEO specifically, I will say a few words about the process of approving a draft SEO, my role as Minister and that of the Houses of the Oireachtas more widely. An SEO is a statutory minimum wage-setting mechanism in a certain economic sector. Essentially, it is a collective bargaining mechanism which, once the statutory thresholds have been met, gives the Labour Court, as a neutral decision-maker, the power to examine an application for an SEO in a given economic sector. As part of this examination, the Labour Court must explore all the policy considerations set out in the Industrial Relations Act 2015 by affording all interested parties an opportunity to engage with the proposals and have their views heard.

Once the Labour Court has complied with this statutory process set out in the 2015 Act, it has the power to make a recommendation for an SEO to me. This recommendation must be accompanied by a report which sets out the process and matters that the Labour Court considered when reaching its recommendation. The purpose of this report is to assist the Minister in deciding whether the court has fulfilled its obligations as per the Act.

My role as Minister in this process is limited. As per the 2015 Act, I have the power to either accept or reject the recommendation as presented. If I agree the Labour Court has complied with the statutory process, based on the statutory report, I am compelled to accept the recommendation. If I or the Minister is not satisfied, the proposal must be returned to the Labour Court explaining why it was not accepted. There is no role for me or any Minister to engage with the recommendation itself.

This SEO will provide for increased rates of hourly pay for workers in the construction sector from 18 September 2023, as well as amendments to minimum pension contributions. Further increases in pay will commence from 5 August 2024. From 18 September craftspeople will see their minimum hourly rate increase to €21.49. Workers in category A, including those with an advanced scaffolding card and who have four years experience, bank operatives, steel fixers, crane drivers and heavy machine operators will receive €20.86 per hour. Workers in category B, skilled general operatives with more than two years experience, will receive €19.35 per hour. I have considered this draft recommendation in line with the terms of the 2015 Act, relying on the statutory report outlining the Labour Court’s deliberative process. I am satisfied the court has complied with its statutory role. Accordingly, my Department notified the Labour Court on 17 April that I accepted the recommendation and that I would be referring the matter to the Houses of Oireachtas, as required by the Act, for their consideration. Furthermore, as required, a draft order was laid before the Houses on 5 April 2023.

Similar to my own role, the 2015 Act also states that the Houses of the Oireachtas may only accept or reject the draft order as it is presented to them. The committee or Oireachtas cannot amend or alter the draft order. If the Houses accept the recommendation, as I hope they will, I will sign a statutory instrument giving effect to this decision. Should the Houses reject or fail to approve the draft order, the proposal for the SEO fails.

I will say a few words about how this SEO came about. The application for an examination came before the Labour Court from application by the Building and Allied Trades Union; Connect Trade Union; Operative Plasterers and Allied Trades Society of Ireland, OPATSI; SIPTU; and UNITE the Union, as per section 14 of Chapter 3 of Part 2 of the Industrial Relations (Amendment) Act 2015. The five unions requested that the Labour Court examine the terms and conditions of those employed in the construction sector as craftspeople, construction operatives and apprentices. Included in this was any sick pay scheme or pension scheme.

Having examined the submissions and the accompanying supporting materials, the Labour Court reported that it was satisfied that the applicants were substantially representative of the workers of the particular class, type or group in the economic sector in respect of which the request is expressed to apply. This allowed the court to proceed with the examination. The court then, as it is required to do, published its intention to undertake an examination of the unions’ request and invited submissions from interested persons. Written submissions were received from four stakeholders: the construction industry committee of the Irish Congress of Trade Unions, the Construction Industry Federation, the Irish Plant Contractors Association and the Construction Workers' Pension Scheme. No parties objected to the making of an SEO. These submissions are available for anyone to examine on the Labour Court’s website.

A public hearing was held on 13 February. All interested parties were given an opportunity to be heard and to engage with the required policy considerations. Having considered the matter fully within the time limits, the Labour Court made a recommendation to me.According to its report, the court has considered the factors set out in section 16(2) of the Act. This includes the potential impact of the SEO on employment, unemployment levels and competitiveness, and that the order would be binding on all workers and employers in the construction sector. I understand the court’s report has been shared with the members of this committee, so they have had the opportunity to examine it in greater detail. It is also available on the Department’s website.

I hope the committee will accept the draft SEO, given its importance in ensuring industrial relations stability in this sector. I know the committee recognises that Ireland needs a competitive, productive and sustainable construction sector for the delivery of high quality and affordable homes and commercial properties, as well as our national physical infrastructure. I believe this SEO plays a significant role in supporting the construction sector through maintaining harmonious industrial relations. The terms of the SEO refer merely to the minimum rates of pay and terms and conditions. At times when the sector is performing well, it is fair to expect that most employers will exceed these minimum rates. The importance of an SEO is to ensure that in times of downturns, workers are properly protected and the sector maintains its attractiveness as a profession for apprentices.

It has been a longstanding practice of the trade unions and employers in the construction sector to enter into collective agreements that govern the terms and conditions of employment. These arrangements have been in place for many decades and have provided the industry with cost certainty and stability. The original SEO, made in 2019, also provides for a dispute resolution mechanism, which helps in preventing industrial unrest.

Should the committee approve this order, I will sign an order giving it legal effect. Its terms will be binding across the entire sector. The new order will become effective on 18 September. It will remain in place for two years and includes a second minimum remuneration increase in 2024.