Oireachtas Joint and Select Committees
Tuesday, 17 September 2013
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Impact of Recession on Low-Paid Workers: Discussion with Mandate
I welcome Mr. Gerry Light, assistant general secretary, Mr. Brian Forbes, national co-ordinator, Mr. David Gibney, communications officer, and Ms Aileen Morrissey, national co-ordinator for training and development, Mandate Trade Union. We will discuss its report entitled Decent work? - The Impact of the Recession on Low Paid Workers. I wish to apologise in advance. I had hoped many more members would attend today's meeting, but it clashes with party meetings among all the various parties. Some members hope to join the meeting at a later stage. If not, this discussion will feed into later ones and will be well received by others.
I advise the witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or any official by name or in such a way as to make him or her identifiable.
I invite Mr. Gerry Light to make his presentation.
Mr. Gerry Light:
Thank you, Chairman. I thank you and the committee for the invitation to appear before you.
Mandate is one of the country's largest private sector trade unions representing 45,000 workers across retail, distribution, administration and the licence trade. It is therefore not a surprise that our membership comprises predominately female part-time workers. Significantly, the sector in which we are active counts for 15.5% of employment in our country.
From an individual worker perspective, it is crucial to note that the importance and value of retail work has significantly increased largely due to the loss of employment in other traditional sectors, such as construction and manufacturing. In many instances, the earnings derived from retail have become the principal income for households. Therefore, it is fitting that appropriate attention is focused on the concerns of all workers in the sector and not just those with union membership. Furthermore, decent pay, which is an issue that we wish to highlight and discuss with the committee, is more than a sectoral interest in that it touches the lives of all workers.
Quality of employment is crucial from a societal perspective: it not only shapes how economic activity is generated and maintained, but affords significant swathes of citizens the basic human right to access and sustain decent work in order to allow them and their families to fully participate in the society in which they live.
Since the 1970s, there has been a growing concern about the growth and prominence of what is referred to as precarious work. Ten years ago, seven in ten workers worked at least 35 hours a week. By the end of 2011, this had fallen to six in ten workers. Recent Central Statistics Office, CSO, data show that the share of involuntary part-time working is also growing, with more than 135,000 workers classified as underemployed representing a staggering 46% increase on 2008 figures. Those figures are the highest in the European Union.
For the purpose of this discussion, precarious work arises from uncertain, unpredictable and risky provisions contained in employment situations or contracts. Labour market security for these workers is increasingly eroded by demands for greater flexibility to hire and fire, growing use of temporary and part-time contracts, flexible working hours, downward pressure on pay, and limited investment in training and upskilling, along with an erosion of social security rights. These workers are trapped in jobs that do not allow them to earn a living wage and, at the same time, deny them the opportunity to seek another job or even to quality for social welfare payments.
Typically, certain groups of workers are more exposed and affected than others - women, young people and migrants are all over-represented. It is sad that basic protections for those vulnerable workers, such as statutory minimum wage, joint labour committee, JLC, pay arrangements, the low income tax regime for low-paid workers, along with social protection, were among the first areas to come under pressure as the recession took hold.
Against that backdrop, it is important to note that the Irish labour market is one of the most flexible, with the Organisation for Economic Co-operation and Development, OECD, statistics showing that we are placed sixth out of 42 countries. More significant is that the same figure shows that, from an EU perspective, only the UK is more flexible. It is remarkable that in such an environment our social protection regime remains lean. More than 25% of our workforce is low paid, with the national employment survey showing that workers in the wholesale and retail sectors are the second lowest paid in Ireland, with only accommodation and food service employees earning lower wages. Recent EUROSTAT labour costs annual data show that Irish retail labour costs are 20.6% below the average of EU-15 countries, 16.2% below the average other core EU-15 countries and 37.4% below the average of other comparable small open economies.
The economic crisis has exacerbated the problems. Total consumer spending has fallen by more than €11 billion from its peak. It is solely this fall that has been the driving force behind the predicament in the retail sector, not labour costs and inflexibilities. Consequently, we urge the Government to redress some of its austerity measures in the coming budget with a view to introducing confidence-building measures with the domestic economy and retail at the core.
It is surprising that the problem of precarious work receives little study or debate. Mandate therefore commissioned Behaviour & Attitudes to conduct a survey of our membership to fill this obvious information deficit. A unique insight into the financial and psychological distress being endured by low paid workers in the retail sector emerged. However, those difficulties are not unique to Mandate members and it is frightening to consider, if that level of difficulty is apparent in the unionised sector, how prevalent and deep it is elsewhere.
The Behaviour & Attitudes research findings include the information that more than 70% have worked in retail for five years or more; fewer than 33% have full-time contracts and the rest work on average 22 hours a week over at least five days; 50% have their hours changed at least once a month; only 33% have stable working hours; more than 25% sought greater clarity or certainty on their working hours; 40% reported a fall in take-home pay over the previous 12 months, which is an average of €109 a week; 60% were seeking additional hours, 50% of which had their hours cut; 40% were experiencing personal financial difficulties; 70% were less inclined to visit a doctor, which is remarkable; 75% are suffering more stress; 10% have another job; 17% are claiming a social welfare payment; 48% - nearly half - are available five days over seven; and 97% receive no shift allowance whatsoever.
In the economic environment there are those among the employer ranks who argue for the need for total flexibility in employment contracts in order to compete in the challenging and competitive situation that exists. It is ironic that many of the same voices made identical demands during the years of unprecedented growth. They also argue - mischievously and without foundation in our view - that such freedom will act as a catalyst in reducing unemployment levels. The latest focus in this area is remarkable, given the promotion by some for zero-hour contracts.
Certain sectors in an economy require part-time working and flexible working arrangements. However, we are talking about the disproportionate extent to which the offers of such involuntary employment contracts have become the norm. A recent International Monetary Fund review of the Irish economy pointed to the reality that were these involuntary contract workers to be factored in, effective unemployment levels would rise dramatically. The challenge of persistent high levels of unemployment is significant without increasing the burden on the State by swelling the ranks unnecessarily with those who are involuntarily underemployed.
A key consideration behind our recommendations, which will follow the presentation, is the need for an appropriate balance between the responsibilities of employers and the State in ensuring access to decent work. Members should be under no illusions that greater flexibility for employers and the subsequent growth of precarious work increases the need for the State to supplement inadequate pay.
It would be remiss not to inform the committee about how Mandate is directly intervening with reputable and willing employers in an effort to deal with the decent work agenda. Since the demise of the social partnership model, we are increasingly involved in direct collective bargaining with individual employers. During these negotiations we have, in the main, successfully agreed arrangements through which the established weekly earnings thresholds of our members are protected. Moreover, they are guaranteed access to additional hours, in a structured manner when they become available. The valuable and real contribution that agreements make to individual workers, their families and their communities cannot be overlooked. The economic confidence and participation that follows such income certainty must also be beneficial to the domestic economy by making an obvious contribution to the immediate and sustained boost that it requires.
It is argued by some that sufficient statutory employment measures are in place to ensure that such intervention by trade unions is not necessary for workers to ensure that they are not subject to discriminatory, victimising or downright unfair practices in the workplace.
Sadly, based on real experience, this has proven not to be the case. In order to vindicate their rights, many workers had to identify and expose themselves and engage in what turned out to be, in many cases, an individually tortuous process. This, in turn, has led to further exploitation, with many of them choosing to simply leave the employment rather than pursuing their rights. The most recent figures from the National Employment Rights Authority show that if left to the will of some employers, workers will not be given what is legally and rightfully theirs. Based on inspections carried out, the levels of non-compliance are reported to be at 55% for the grocery retail sector and at even higher levels in some other sectors. We would argue, not surprisingly, that the introduction of legislation which provides for real and meaningful collective bargaining rights would assist greatly in improving the plight of precarious workers and in the normalisation of a decent work environment.
Among many challenges, Ireland is suffering a labour market crisis, with persistent high levels of both unemployment and under employment. Therefore it is clear that the requirement to return as many people as possible to employment remains a priority. However, job creation policies must have regard for the quality of the jobs being created and we must ensure, to the best of our ability, that the desperation of those currently without access to an adequate income and a basic standard of living is not exploited and that they return to the labour force willingly and for all of the right reasons. Ultimately, a "more jobs at any cost" strategy will create more problems than it solves for our economy and society into the future.
The State has a crucial role to play in protecting the growing number of working poor through the provision of appropriate legislation, labour market regulations, income supports and training and upskilling opportunities. It is in this context that we are calling for a number of proactive interventions to remove certain traps or obstacles which are encountered by precarious workers in their daily working lives. To address what we call the flexibility trap, we are seeking the introduction of a new code of practice to replace the one that currently exists to assist workers to access reasonable working hours. We are also seeking some PRSI reform to remove the obvious incentives that currently exist and which are leading to an increase in the number of precarious jobs in the economy. On the question of income we are seeking, where appropriate, reform of the jobseekers' payments to recognise the reality of precarious work. We are also seeking the temporary reduction in the number of working hours required to qualify for family income supplement payments. We also believe it would be appropriate, now more than ever, to introduce a refundable tax credit for low-paid workers.
On the question of skills, we are seeking the introduction of an effective training support system for under-employed and low-skilled workers. In the context of exploitation of workers, we are greatly concerned that we still do not have a replacement for the old JLC-REA system. We are calling for the speedy replacement of previous JLC-REA statutory protections with effective mechanisms to ensure that workers can vindicate both their individual and collective statutory rights. We are also seeking adequate funding for the appropriate State bodies to ensure that workers can access their rights through timely inspection and enforcement regimes. As I have already said, we believe it is vitally important that we have legislation on our Statute Books that allows for a meaningful right to collective bargaining. Finally, in the context of this year's budget, which is only a few weeks away, we believe that we should use newly-available funds to reduce the size of the planned budgetary adjustment for 2014-15. We are calling for the introduction of a stimulus package to lift consumer confidence and increase consumer spending which will, in turn, lift the domestic economy.
Go raibh maith agat. I welcome the representatives of Mandate to this meeting and thank them for their presentation. I attended the launch of Mandate's report in the Oireachtas audiovisual room eight or nine months ago and have read it a number of times since. I ask the representatives to outline how the current recession and austerity policies are impacting on the people that Mandate represents. The speakers gave us a very good overview but I ask them to tease it out a bit more. They mentioned the changes to the JLC system. Some trade unionists believe that some aspects of the reform proposals are quite good and I agree that there are positive elements. However, I am concerned about the proposals regarding the Sunday premium payment. If what the Government proposes is implemented, it will negatively impact on low-income workers in particular. What is the difference between the protections currently in place, that is, the levels of Sunday premium payments that workers currently enjoy and what is being proposed? What will the difference be and how will the changes affect low-income workers?
I also wish to raise the issue of zero hour contracts, which are becoming more common here. Such contracts are very prevalent in the UK and they are a cause of great concern. They are underpinned by employer bodies and governments who talk about flexibility. Nobody is against the principle of flexibility but we have seen unscrupulous employers exploit workers on zero hour contracts, especially those workers who are not in trade unions. If such workers do not comply with the wishes of their employer, if they join a trade union or even talk about doing so, their hours are reduced. Workers have been bullied in the UK. Do we have sufficient protections in this State to protect workers against that type of exploitation, harassment and bullying if zero hour contracts become more prevalent? How prevalent are such contracts here? They seem to be on the increase in the health sector, particularly among care workers. In terms of the people represented by Mandate, how prevalent are such contracts and what concerns does the union have about them?
The representatives spoke about the need for collective bargaining and trade union recognition, with which I agree. We are in the year of the 100th anniversary of the Lock-out and this should have been the year when we put in place proper collective bargaining rights. What is the view of Mandate on the Government's commitments in this regard? The Government has given a very loose commitment to some form of collective bargaining. Has Mandate been given any indication as to what shape that will take? Has the union any concerns in this regard and what is its view on the best way to introduce collective bargaining rights?
On the issue of the reform of employment rights bodies, we are now looking at the creation of a single, independent body that will adjudicate on complaints made by workers. There are many good aspects to this reform but does Mandate have any concerns about what is being proposed with regard to the new employment rights bodies?
My final question draws all of the previous points together. Mandate's figures show how difficult life is for retail sector workers. Less than 33% have full-time contracts while the rest have worked an average of 22 hours per week over the last five years, with 50% of them experiencing a change to their hours. One of the problems in this economy now is that employers can simply disregard employment rights. They can choose not to give people what they are entitled to, be it holiday pay, minimum hourly rates of pay and so forth because the employment rights legislation we have is not robust enough. There are not enough sanctions in place for non-compliant employers. Does Mandate share that concern? If so, what improvements in the sanctions against those unscrupulous employers who disregard employment rights would the union like to see introduced? Such employers exploit workers because they believe they can get away with it and that the worst that can happen to them is that they will have to appear before an employment appeals tribunal and pay the money owed. Are there sufficient sanctions to deter employers from behaving in such a fashion? It must be said that I am referring to a minority of employers - the majority do not behave in that way. What is Mandate's view on this issue? Has Mandate made any submissions regarding improvements to legislation on foot of what the Government is considering in terms of the reform of employment rights bodies? What is Mandate's analysis of the situation and what, if any, proposals has it put forward?
Mr. Gerry Light:
I will endeavour to cover all of the points raised by the Senator. He raised an extensive range of issues, all of which I will attempt to address because they are very important in their own right, in the context of the broad issue being discussed here today, namely, decent work.
To address the last question first, Mandate is very active in making submissions in respect of all of the live issues before the current Government. We do so in our own right and also under the auspices of the Irish Congress of Trade Unions. I have with me, for example, the detailed submission that Congress made to the Minister in March of this year on the issue of collective bargaining.
It can act in a really meaningful way to assist the plight of the increasing thousands of workers who are in precarious jobs. It is not just that alone. If the problem was that simple we would have solved it a long time ago.
The first question asked about the impact of part-time working and precarious jobs and how this creates difficulties for individual union members, their families, their role in the community and, most important, I suggest, as consumers. Consumers have the capacity to make a contribution to refloating the economy. We have identified that some of the current economic strategies that are being followed are flawed. Essentially, we are cutting off our nose to spite our face. The effect of the cutbacks on the unemployed and under-employed workers causes deep hurt to the lives of ordinary people and does not allow them to make a valuable contribution as consumers and as citizens genuinely to play their part in refloating the economy. One only has to read the report to see the extent of the impact. One then only has to dig down in any field to see a multiplicity of other impacts, such as on people's health or on domestic relationships, all of which is probably immeasurable at present but in all likelihood will bear its fangs in the years to come. Our concern about this issue was largely the reason we commissioned Behaviour & Attitudes, B&A, to conduct research on our behalf. What is even more frightening, and we alluded to it in our presentation, is the extent to which the rights of people are being abused. We in the Mandate trade union are on the cusp and are giving serious consideration to reaching out to those who are not members of the union and conducting in-depth research with them to see the impact the recession and the precarious working environment is having on them.
Individual Acts were mentioned, which are all important in their own right, but the logical starting point for Mandate is a review of the current code of practice on access to part-time working. The 1997 directive on part-time working and the code of practice that was introduced in 2006 largely focus on the right of employers to reduce hours from full-time to part-time. Very little mention is made in the code of practice of how one might assert one's right to increase the number of hours worked.
A clear principle enunciated in the original directive was to try to achieve, where possible, a sense of balance between the needs of an employer on the one hand and the needs of the employee. In many ways certain employers overreacted when the Mandate trade union discussed the need for a beefed-up code of practice, and contended that it was too much involvement in the running of their business and that they could not have a sense of interference from trade unions and workers. The key words are "where possible", that where possible, employers should be obliged to offer increased working hours to their workers. I do not think the code of practice on part-time working goes anywhere near that. It falls a long way short of it. In so far as one can give teeth to a code of practice, because we are all aware that a code of practice is not legally enforceable but can be relied on as evidence in certain cases, we need to ensure a mandatory code is put in place so that if a worker seeks additional hours from his employer, the employer must follow a set mandatory code and set out in clear terms the reasons additional hours cannot be offered.
I see claims that an additional 200 or 300 jobs have been created, and only yesterday there was another announcement of hundreds of jobs being created, but I think we must make a habit of asking how many of these jobs are full-time jobs, how many hours of work will be available, and what other protections, privileges and entitlements are being afforded to these workers. If we ignore the conditions of work, it is because it is convenient to do so on the one hand and it is an act of folly to do so on the other. In some circumstances, at the stroke of a pen, one full-time job can turn into four jobs overnight and the employer can claim that four new jobs have been created. That is how easy it is. We need to get the code of practice beefed up and give workers mandatory rights. We suggest in our report that workers should have the right to challenge decisions when it is clearly evident that an employer is engaging only part-time workers for very obvious cost saving measures, with no regard for the equality of employment that the workforce is being offered.
Another issue that is attracting a great deal of discussion is zero hour contacts. It was horrendous to hear a major fast food chain admit freely that zero hour contracts were the practice in its business. The fast food industry bankrolled the challenge against the joint labour committees, JLCs, and had them removed from the Statute Book. I suggest, but let me preface all my remarks, that this is the audacity that some employers have. This is further evidence of the need to beef up the area governing the zero hours provisions in the current legislation, the Organisation of Working time Act 1997. As was pointed out, an employer can retain a worker for a certain number of hours per week, but does not have to give him or her those hours and must pay only 25% of the promised hours if they are not given to the worker. At the same time, however, the employee cannot make him or herself available for other work. In some ways, a worker, by keeping him or herself available for the promise of those hours, may not be able to access social welfare benefits either. It is ludicrous.
Mandate suggests that such contracts cannot be seen in isolation but are interrelated with social welfare and taxation. The report commissioned by Mandate highlights the ludicrous position that if an employer hires two part-time workers instead of one worker, the employer PRSI contribution will be cheaper to the tune of 2.25% . That is a clear incentive to create part-time jobs. To increase that ceiling would send out a clear message to employers to do their best. We need people on board not only as workers but as consumers. We regularly drive home that message to the major retailers, asking them never to forget that a sizeable proportion of the workforce are also consumers. One needs consumers to prop up the business.
In respect of the broad plethora of employment rights legislation, one does not have to look beyond the National Employment Rights Authority, NERA, report, to which I alluded earlier, that in our sector the level of non-compliance is 55%, rising in some cases to 70%. The number of inspections are down by nearly 1,000, which is worrying, and that is the reason we need to resource the implementation and ensure that whatever bodies are in place, an adequate number of inspections are carried out on the ground. Before the inspection stage, we need to ensure the provision of adequate information. Workers need to know their rights. The basic starting point is that if one knows one's rights, one is more likely to seek the implementation of those rights. Far too often, workers are kept in the dark. There is a need for information, inspection and appropriate penalty for breaches. An employer will keep doing things in breach of the regulations for as long as possible and pay the penalty when caught, but will start the wheel all over again. It is vital to deal with this.
I refer to the new measures in place for collective bargaining and what the Government has in mind in that respect. It should read and re-read the Congress submission, to which we had an input, because that is the road we need to go down. There are fairly detailed reasons given as to why collective bargaining is essential in this society-economy, now more than ever. What amazes me about this - it is ironic in many ways - is that only last week we heard the main employers' representative body say that collective bargaining is not the way to go. In name that body is only a union; it used to be called the Federated Union of Employers. It understands the importance of collectivism. It represents individual employers in a very effective way but when it comes to workers' rights and needs, and the right for a worker to be able to enforce those rights legitimately, employers say they do not need it. If my memory serves me right, last week workers were referred to by one of the employers' senior officers as "individual capitalists selling their labour". That is the difficulty we have as trade unionists, and not only as trade unionists alone but as people who have a genuine moral interest in society and what we want to build coming out of this recession. It is fine to have a nice, fixed economy, looking sparkling and bright and ready to go again, but what we need is a society of which we are proud. We cannot afford a legacy from this recession that will affect individual workers, their families and communities for many years to come.
Those are all the important points. We have a comprehensive or holistic view in that respect. The jury is out on the new employment rights body. We subscribe to the general description the Minister has outlined on a number of occasions, namely, that is to allow workers to vindicate their rights more easily and quickly and of course we subscribe to that. At present there is a waiting list of up to three years for a person to get to the Employment Appeals Tribunal, which is ridiculous. That applies to all workers. As a general principle, therefore, we will subscribe to that and see how it works out, given what is said about the proof of the pudding.
It is good to meet Mr. Light again. I must explain to everybody that Mr. Light and I sat on opposite sides of the table for many years and always got on fairly well together. I believe we managed on that basis. I was pleased with the way he concluded his presentation, talking about the need to lift consumer confidence in spending into the domestic economy. That reminds me that he and his colleagues in Mandate recognise there is a need to create consumer confidence. If we do not have people spending it is unlikely we will be able to create jobs.
My query to Mr. Light concerns how, in regard to flexibility, we can balance the difference between the importance of having a job and the importance of the rate of pay. It would appear that if a retailer is going to succeed he or she must balance the books. To do that the books must ensure that ultimately there is a profit. In the 50 years I have been in business a number of chains and shops have disappeared from the high street. In recent years, as one travels throughout the country one sees streets that have so many empty shops, which is a shame. Yet it is not merely a question of increasing consumer confidence in spending but also about being able to balance the books. How does Mr. Light reach a decision in that respect in pursuing benefits for his own members? Is it better to have somebody with a full-time job, or somebody with higher pay? The higher the pay the fewer jobs there will be. I am not sure how long that can last or how he can balance the books on that basis, and would like to hear his view. It seems to me a very large number of jobs no longer exist. When I started in business there were always young people to wheel one's trolley out to the car and there were bag-packers at every check-out in the supermarket. When one went to buy petrol there was always someone to fill the tank. However, when the rates went higher those jobs no longer existed. Is it better to have somebody in a low-paid job than to have no work? I am not sure how one strikes that balance.
Clearly, there are other areas to be considered. Mr. Light mentioned the unemployed, and our rate being the highest in Europe, a point I did not quite understand. He mentioned that recent CSO data show that the share of involuntary part-time working is also growing, with more than 135,000 workers classified as "underemployed", which represents a "staggering" 46% increase on the 2008 figures, and a figure that is also the highest in the EU. Mr. Light might explain to me exactly how we might solve that.
I have only one other point to make on what was stated, in regard to the refundable tax credit for low-paid workers. Will Mr. Light look again at that so that I can understand the point he is making? Is there something we can do on that basis?
I am introducing a Bill next week that I hope will solve the problem of upward-only rent reviews for retailers. Does Mr. Light have any comment on this area? It threatens a very large number of retail and commercial businesses. Before 2008, rent reviews were upward-only and they have been maintained. In consultation with my legal advisers I believe we have found a solution. We will introduce it next week and will seek the support of everyone in that respect.
Mr. Gerry Light:
I thank Senator Quinn for that brief history. It was productive for us to be able to do business together as a worker representative body in a very successful and indigenous retail business in Ireland. In many ways that epitomised what is good about what we are seeking here, which we hope will become the norm within the retail grocery business and on a broader footing across the employment scene in Ireland. We agreed on many points during these years and were very clearly tuned in to the needs of business but we could also prove when we came to the table that we had a realistic mindset in respect of everybody's needs. In many ways we were not greedy and were prepared to take whatever we needed to take out of the business to justify our participation. That can be achieved and in many ways it is what we are talking about today.
I will take the Senator's last point first before coming back to what he spoke about in respect of balancing the books. Over the past seven years we have become more proactively engaged, in very difficult circumstances, working with certain businesses since the impact of the recession has hit. Some very difficult decisions have had to be taken by our members under our guidance. I am of the view that those businesses will come out of the recession stronger and better for having such an approach, compared to those businesses that reduced everything to the bare minimum of statutory entitlement. Nobody knows better than Senator Quinn that ultimately, when there is a workforce that is regarded properly and is in tune with the needs of the business, it is more likely to be a successful business. The opposite is also the case. When people come to work every day feeling it is a drudge and that they are being exploited, without seeing any real tangible benefit for the fruits of their labour at the end of the week, what one will get from them is only a basic involvement in the business, nothing more. Every successful business needs more than that to be successful.
We have been very proactive on the rents issue in appropriate circumstances and working with certain employers, aligning ourselves to certain campaigns where we believed the situation in which some businesses found themselves was clearly unfair, given the extortionate rents and rates that were being applied, particularly within the context of upward-only reviews. Some work has been done on that in recent times, which must be welcomed. A greater degree of common sense is being applied to the whole area of rents, as opposed to rates. Rates are very much within the gift of the Government and the local authorities and they know what needs to be done. Some public representatives were very much to the fore in saying it was ridiculous to have increasing rents applied to businesses that were in decline. At the same time, only last week I read that certain local authorities are raising their rates in respect of those same businesses. There are double standards here. We must all get real and focus on the battle. The price is huge but it will benefit all of us.
How do we balance the books? It is the classic scenario - how far does one go and when does a job become not worth having? That is the key question, the core of what Senator Quinn has posed. All of us around this table have been around long enough to know and accept the basic principle that being at work should be a route out of poverty. However, on an increasing basis, having a job is not proving to be such.
This is apparent if one looks at some of the figures indicating the rate of people at work and the risk of poverty, which increased by 18% between 2009 and 2011.
These figures pose some interesting questions. It is a dilemma for workers as to whether a job is worth having and in many ways it is a dilemma for business people who attempt to flog business - to the detriment of individuals - and who pretend there is some chance that business will survive. This is a key issue in respect of balance. Some businesses go to the walls because they must. A business should not stay in place one moment longer than necessary if that is to the detriment of and through the exploitation of low paid workers. That is key. We all know this is not an easy situation, looking at the same sets of figures from different perspectives and circumstances. We must focus on the key considerations for all of us, employers, workers and workers' representatives alike, whether having a job or a business is worth it and what it takes to keep that business going.
One of the key issues in regard to the under-employment figure is the issue of part-time workers. The CSO has only recently started to focus on the importance of distinguishing part-time workers from full-time workers. It seems safe to assume now that many part-time workers are involuntarily underemployed. This is a result of what has happened in our economy over the past number of years. The figure we quoted in this regard is 46% and the question is how we can change this in a positive and effective manner. We change it by introducing a range of the measures we have put forward for consideration here today so as to ensure we start lifting some boats. We may not necessarily have a rising tide at this time, but some would have us believe there are positive signs on the horizon.
We need to ensure we introduce some, if not all of the measures we have put forward. For example, we alluded in our presentation to the issue of banded hours. In other words, we should sit down and address the needs of the business, assess what it can afford to pay in current circumstances and put provisions in place to ensure that whatever the business has required in the past to keep it afloat and to keep it open, the hours needed will be given to workers. In that way, they will have a certain degree of certainty in regard to their hours and can build some certainty around that. As I said already, this certainty would have a significant impact across the economy, from basic purchases to the purchase of houses. We are all aware of the dilemma facing people now when seeking a loan from a bank or a building society. They are asked for their contract. Notwithstanding the fact they may be working 30 hours a week regularly, if their contract says they are contracted to work 15 hours a week, which is the reality for many of these workers, they are told it is not possible for them to get the mortgage. We can effect change from the basic level of participation in work right up to more detailed participation and the serious purchases people must make.
To answer the question asked, the first way we impact change is by identifying the problem. We should not convince ourselves or let ourselves be hoodwinked into believing that everything is grand because somebody has announced there are 400 new jobs. This announcement may have a net effect of taking that number of people off the live register, but what our campaign highlights and will hopefully achieve, is an awareness of the precariousness of work and the extent to which part-time working has become - unnecessarily - the norm. Within the retail sector, even where we are organised, some of the most profitable retailers operate with 80% part-time workers. I alluded to a code of practice earlier, and if it was implemented in spirit, that would not be the case. The hours would have been distributed in a much fairer way, before a level of 80% part-time workers would have been reached.
No one thing alone will solve the issue of the precariousness of work hours. Multiple approaches must be taken to deal with the areas we have highlighted here. If nothing else, it is good if we manage to highlight the problem at committees such as this and in areas of employment where workers are properly and formally represented, and in areas where they are not. Hopefully, they will get the confidence to speak out and ask whether others have seen a debate on it, seen it mentioned in the paper or seen Mandate's report. I hope they will be able to ask whether they should go to their employer and make a case for more hours. The reality is that far too many of them would be afraid to do that, because the consequences would be dire for them. This is about information, awareness building and coming up with credible suggestions and alternatives. It is about discussing these and getting the needs and perspectives of all parties discussed in the debate.
We must ensure that what comes out of this is that we come up with a fair and objective solution. We must all approach this in a realistic fashion. None of us should do what was probably done during the boom years- not by workers I hasten to add - which was to get ahead of ourselves and engage in disreputable practices in regard to the price of services, from property to basic commodities. If we learn nothing else from the economic doom, it is that we should come through this more in tune with what is required to build the economy and society of the future. It would be a terrible travesty if we just fixed the economy and forgot about citizens.
Mr. Gerry Light:
That is what happens. While it is an unintended consequence, as Senator Quinn would be aware this would be a regular feature within the retail sector where people are relatively low paid. The sector also has incremental pay scales based on service. Those scales and progress through them is closely monitored and when somebody gets to a particular point, the hours are maxed out at the contractual entitlement and somebody else is brought in. This is something we are working on. Banded contracts and the arrangement whereby established hours are protected and future hours, when available, are guaranteed are ways of eradicating this practice by and large.
Cuirim fáilte roimh ár gcuairteoirí anseo inniu. This is an important issue and it is a pity that because some parties are having their think-ins today there are not more members here. Ireland is an outlier with regard to under-employment, which is causing so much damage in society. Men, women and children are in poverty as a result of under-employment and the impact is felt right throughout society. We need to focus on this issue. The idea of a zero hour contract is a retrograde step. It reminds me of the 1920s and 1930s when men and women would go to a market square or to the docks and hope an employer would pick them for the day. If they were unlucky, they would return home without a wage. It is incredible to think we are going down that route with regard to employment.
The question asked about where the balance lies was a good one. For me, a person is entitled at least to a minimum standard of living. This minimum standard includes the right to shelter, education, health, food and clothing for children and the opportunity to raise one's family properly outside of poverty. This should be the yardstick or base. There is no doubt that if we keep pushing wages down, this will enable another group of businesses to function. However, we must have a floor.
One of the problems with under-employment is that it creates a situation where we have what is like a three-card trick. We look at employment figures and believe the situation is improving, but even the IMF figures showed that due to the level of under-employment, real employment is far lower. People fall off the social welfare cliff when they enter this area. I know of people who if they work an extra hour on a Thursday will lose two full days of entitlements to social welfare benefits and a gamut of other welfare supports. Other sectors of society, such as the legal profession and other professions are very well regulated and have protected wage structures.
Mr. Light touched on the issue of the zero hour contract, but would it be possible for him to explain to the committee how it works in practice for an employee?
How prevalent is the PRSI trap that was mentioned? Does it occur only for a minority of workers, or is it the average?
The issue of regulation is extremely important. This country has suffered so much because of the lack of regulation. Regulation means nothing if it is not going to be enforced.
Mr. Gerry Light:
It is very clear in the current legislation. It is a fairly simplistic model and the provisions contained in the Organisation of Working Time Act 1997 are not satisfactory. If a worker makes himself or herself available for work and that work is not made available, there is a very small compensation of 25% of the minimum 15 hours for which the worker must make himself or herself available. That corresponds to three or four hours, which is minuscule. I would say that the application of the legislation is largely not practised outside of the unionised sector. Within the unionised sector, we are now making advances in the other direction entirely, which is the banded contract arrangements that we are negotiating, even in the teeth of the recession, with reputable and willing employers. That shows that it can be done. I will go back to Senator Quinn's question earlier. If there is a will to engage, both sides can sit down and figure out where costs can be cut.
Deputy Tóibín made an important point, which we highlighted in our presentation, in referring to the basic standards that are needed for somebody to participate properly in society. Whatever is required to allow that should be the basic return. If a business cannot provide that return to its employees, we have to ask whether it is worthwhile offering those jobs and whether we should put our efforts into different areas.
We need to beef up the legislation on zero hours contracts. We would like it to follow our achievements in the area of banded contracts. We would like to see greater compensation awarded to the worker. The current scenario is that I must make myself available, so I cannot do other things such as look for that second job because I am effectively on call. It interferes with some of the very complex social welfare arrangements that we currently have in place. We need to ensure that the compensation is greater. Greater onus must be placed on the employer to ensure that adequate notice is given to employees of the extent to which they are required to make themselves available. Running a business can be complex at times, but it is not rocket science, particularly when it comes down to rostering staff. Even in the current difficult times in which we live, staffing requirements can be determined to a fairly exact degree. We have passed that by and many employers now figure out their staffing requirements first and then figure out how to reduce those staffing costs even further, with a view to increasing or maintaining the profitability they may have had two or three years ago. Common sense tells us that such a degree of profitability is not attainable any more, but profitability is still attainable if we are all realistic and generous towards each other and figure out what we need to take out.
We also need to have a provision in the zero hours legislation whereby there is an obligation on the employer, after a period of time, to sit down with a worker to figure out the hours secured over a period of time and put them into a contract of employment as a minimum number of hours. Increasing the threshold from 15 hours would also help significantly.
A point was made about the intricacies and complications that arise in respect of the interface with the social welfare system. This is a major issue. Because of those intricacies, the relevant provisions are not apparent or known to many, not least to the individuals who suffer when they are thrown into those circumstances. There are five broad areas in the report, but I would like to put one of these on the record. I refer to the treatment of flexible workers under the social welfare system. Flexible workers cannot meet the substantial loss criteria. Under-employment of flexible workers is not recognised in the current social welfare code, which means that we still discount work on the basis of days lost and not hours. If I lose hours, these are still calculated on the basis of days under the current social welfare code and in the legislation. It is impossible for precarious workers to establish normal patterns of work, which is often a requirement for social welfare, as they do not have normal patterns of work. Our presentation has shown how much these patterns fluctuate from one week to the next. In certain circumstances, flexible workers cannot qualify for systematic short-term work options. That is a plethora of different requirements, depending on whether it is systematic short-term work, permanent or temporary work and so on. This entire area must be examined and we must ensure that we are not making a difficult situation worse for these precarious workers, because if we do that we are doubling the burden. I made that point during the presentation.
One of the main provisions for the support of low-paid workers is family income supplement. Due to the way it is set out at the moment and due to the minimum hours threshold - 19 hours - many precarious workers cannot qualify. Due to the fluctuating nature of their work, their circumstances change from one week to the next. One week they can be above the ceiling and the next week they can be below it. Many employers are reluctant to sign off on family income supplement forms as well. Notwithstanding the fact that the workers are at the threshold, the employers cannot be certain that their employees will be at the threshold the following week.
The interface of the social welfare code with working hours is probably worth an entire committee meeting in itself, but-----
We had a report commissioned by Deputy Lawlor last year on casual workers and their entitlement to social protection. The report covers some of what has come up here, but it might be timely to look at it again using today's presentation.
I welcome the witnesses and I endorse everything that was said about the social welfare system. We have a social welfare system designed for the early part of the 20th century. I met the Minister during the summer and I made that point to her. People are afraid to sign off because it takes so long to sign back on. Deputy Lawlor kicked off the ball on this last year and we need to do something about it. A debate has started about the income trap, which Mr. Light described well. The Minister spoke about it at lunchtime on the radio, but she just said the Government would take care of it. We have much work to do to enable the implementation of Mr. Light's suggestions, which he highlighted so well in his response.
I would not like this committee to give the impression that every employer is trying to get the last drop of profit and cut hours. Many small employers have not even paid themselves over the last few years. They have tried to keep the door open and they have not had support from banks or others. In trying to keep their workers paid, they often have not paid themselves. They are not profiteering; they are trying to keep the door open. Unfortunately, many of them are not able to do that and then they find themselves subject to a social welfare system that does not cater for them. I would not like the wrong impression to go out. There are undoubtedly multinational employers that are doing what Mr. Light is describing, but the last three years for most SMEs have been about keeping the door open and trying to keep people in employment, often at a cost to themselves.
I will move on to that point. The Mandate magazine Shopfloor is a very good magazine. Mandate has the power to bring about change. Someone raised the point when I was coming in to this meeting about how to create awareness. As one of the better-organised unions, Mandate should be promoting the good employers and the businesses that are trying to give a decent wage and fair employment such that when I am spending the few euro I have I know that if I go into business X those running it are doing everything in their power to try to support employment, but if I go to business Y I know those running it are enforcing contracts on them. I can make the choice but if I have the knowledge I would be better able to make it.
Mr. Gerry Light:
Perhaps the direct question was not raised and this is more of a comment. I reiterate what I said earlier. We are in no way suggesting that all employers are bogus. Probably more than anyone else we are working with the employers who have struggled in recent years and we are getting their employees to work with them through our guidance to ensure that they are in a better place if and when we come out of this recession. We are acutely aware of that and therefore we do not tar everyone with the one brush. We are only too glad to promote the cause of good employers.
I thank Deputy Calleary for his kind comments about our Shopfloor magazine. A good deal of hard work goes into it and it is good to see that recognised. We launched a key initiative at the Irish Congress of Trade Unions biennial conference in Belfast this year and we promoted it heavily there. It is called our Fair Shop campaign. The details are on our website if committee members wish to examine them. Basically, the Fair Shop campaign does what Deputy Calleary suggested, that is, it recognises and applauds employment that works with workers and the representative bodies in a proactive way to ensure the difficulties that we are all encountering as we travel through this recession are lessened to the greatest extent possible or as much as we can. We believe it is an important initiative. Even if we do not go beyond the trade union family, some 800,000 workers are still affiliated to trade unions on this island. It is the biggest civil society organisation on the island. We believe it is most important but it is important beyond that family as well.
The concepts of fairness and fair play should be inherent in us all. We should not do a bad turn to lose the chance of doing a good turn for anyone. The concept of Fair Shop is there and we are only too pleased to promote it. We have had local events and we plan to have more local events. This may be of interest to some of the Deputies and Senators in the committee. We had the national launch but we plan to have local launches of the Fair Shop concept and if any committee members are interested to know when and where they will take place, we would be pleased to let them know and invite them along.
I will shortly conclude the meeting. On behalf of the committee, Mr. Light, thank you very much for your presentation today. My apologies that some members are not here, but the work will be shared among them.
I have a question of clarification. In the list of recommendations or areas on which you want us to focus reference was made to the income trap and a temporary reduction in the number of working hours required to qualify for the family income supplement. Why are you saying "temporary" and how temporary do you mean?
Mr. Gerry Light:
How long is a piece of string? I suppose it should be long enough to have some kind of meaningful impact. We maintain it should be brought down to address some of the concerns and the obvious reasons. We do not know and we are not being very prescriptive but it should be something lengthy enough to have a meaningful impact and not simply for the sake of doing it. Am I picking up your question wrongly?
When you say temporary, do you mean a number of years? The argument I got was that we need to make a permanent reduction in the hours required, but you are saying there should be a temporary reduction. Do you mean it should be for a couple of years until we get back to the better times?
Mr. Gerry Light:
A temporary reduction. I think so. We should apply that level of thinking to many issues before us. No more than around this issue, what we should be doing is assessing the situation as we find it to give ourselves the opportunity, hopefully, sooner rather than later, as we work our way out of this recession, to question whether it is still appropriate to retain that measure, whether we should build on it or go back to where we came from. I have no wish to fool anyone about this. Given the stark circumstances that present to precarious workers as we sit here today I believe we will be building on what we have as opposed to moving back on a temporary basis. What we need is permanent meaningful movement in respect of a whole swathe of different areas that affect the daily lives of precarious workers and their families.
Mr. Brian Forbes:
Senator Quinn mentioned Irish labour costs. Based on the EUROSTAT labour costs report from 2011 Irish labour costs in the wholesale and retail sector are now substantially below those of most other EU 15 countries and well below average as well. Irish labour costs are 20.6% below the average of the other EU 15 countries, 26.2% below the average of other core EU 15 countries, that is, excluding the countries in the bailout, and 37.4% below the average of other small open economies, that is, economies with a similar economic structure to Ireland based on a small domestic market reliant on the export sector.
The Chairman raised a point about the family income supplement. Mr. Light has dealt with the temporary measure very well but I will add to his comments. This measure should be targeted primarily at precarious workers. The idea is to lower the threshold and make it available only to workers who have attempted to access additional hours but who have had their hours reduced. Our report shows that number to be rather significant at this stage.
Mr. David Gibney:
I will reiterate a little of what Mr. Forbes has said. It would be good to put on the record where the balance lies as well. If an employer pays at a high rate he will not be able to employ as many people. However, if everyone keeps cutting wages there is less money for people to spend in the local shops and the economy. In the past 18 months Mandate has negotiated wage increases for approximately 70% of our members and this has put approximately €10 million in the back pockets of low-paid workers, who spend all their money in the local economy. It is important to put that on the record as well.
On the zero hours issue I was pleased to hear Deputy Tóibín point out that these are real people. Sometimes we produce reports and discuss statistics and numbers and we forget that these are real low-paid workers in difficult situations. In the past six months or so I have met with many non-union workers and talked to them. They are not necessarily getting zero hour contracts but they are getting low hour contracts. I offer one example. The individual is on a ten-hour contract but he had been working for between 40 and 50 hours for the past two years. Then, in February he made a health and safety complaint about a fire door being locked. Subsequently, he was brought down to his contractual ten hours contract. He was obviously intimidated and now he is behaving very reasonably for the employer but he will not put his head above the parapet. Earlier, Mr. Light referred to the breaches of legislation and that out of all the inspections which took place, some 55% of retailers have been in breach of some form of legislation. This individual and his situation does not fall into that bracket because no breach of law occurred but he has been intimidated into not complaining about his rights of employment. We do not have a collective agreement with this particular employment but, to echo the comments of Mr. Light, that is why collective bargaining rights are altogether necessary in today's economic climate, especially with levels of precarious employment on the increase.
I have a little experience of working with the trade union movement in Australia, where they have proper collective bargaining rights. They also have right of entry rights. This means that within 24 hours I can walk into any employment anywhere in that country and inspect for health and safety breaches or other employment breaches. If that type of legislation was brought into Ireland it would sort out a good deal of this trouble. If we are really going to make an impact on the suggestions or make an impact to try to improve the lives of the real people who are at the bottom of these cases then the suggestions in the document are excellent but putting in place effective collective bargaining rights should be a priority as well.
Thanks again for coming in today and we will have further discussions with you later. I thank Deputy Tóibín and Deputy John Lyons, who is not here, because they were pushing to have you attend the committee at some stage. Deputy John Lyons was sorry he could not make it here today. We will review our area report based on this meeting to try to see how we can bring about some action on it.