Willie Penrose (Longford-Westmeath, Labour)

I am glad to have the opportunity on behalf of the Labour Party to contribute to the debate on the Industrial Relations (Amendment) Bill 2009. While we broadly welcome the thrust of some of the legislation we have grave concerns, some of which I will articulate on behalf of our party. What one would expect is that we would examine this legislation very carefully. We must have support on a number of issues regarding the imposition of a constitutional floor. In asserting the primacy of the Oireachtas there is too much delegation of powers taking place. Such power is being hived off to everyone except the Oireachtas. Deputy Varadkar is correct in saying that in 1979 Mr. Justice Henchy referred to this in a court case. It is mind boggling that it has taken in excess of 30 years for this to take place.

The Bill makes provision for the promotion of a harmonious environment from the industrial relations viewpoint that prevails between workers and their employees and amends and extends the Industrial Relations Acts 1946 to 2004 and makes amendments to the Employment Permits Act 2006 and the Organisation of Working Time Act 1997. As the Minister and Deputy Varadkar have said the Bill is one of a number of such legislative proposals that has its origin in the context of the Towards 2016 review and the transitional arrangements covered in the period 2008-9 which come into being as a result of arrangements between the Government and the social partners which dealt with issues pertaining to employment rights and compliance chapters of their agreements. The Bill also focuses on the need to strengthen the arrangement for the making of the employment regulation orders and the registered employment agreements that has been a familiar part of the industrial landscape for more than six decades.

In recent times a number of cases taken at High Court level have sought to challenge the constitutional standing of the legislative provisions which underpin the legal framework for the making of EROs and REAs. It is incumbent on us to avail of this opportunity to update and modernise the procedures, principles and policies which joint labour committees must have regard to in formulating these legislative tools and which are extremely important for sectors where wages were clearly low. I am glad to hear Deputy Varadkar say this. I salute him even though, two years ago, he started off with the opposite view; such an admission is a sign of a good politician. My own view has not changed. As a member of a party which can stretch its lineage back to 1913, we should never cede, without a fight, some of those rights which were hard won on the backs of those great workers in 1913. I salute the then Taoiseach, Seán Lemass, for the work he did in 1966. One can applaud what he did. There is the issue of dismantling the low paid wage structure, whether the minimum wage of €8.65 or the JLCs, the EROs or whatever, the people who are already poorly paid by definition. This was put in place to insure against expectation, to put in place a floor for people who worked hard by the sweat of their brow, often in labour intensive areas. One has to be vigilant. Putting in place the inability to pay clause, the exemption clause or whatever, could be the start of a slippery slope, against which I caution. Indeed, the party of which I am a member wants to caution the Government against embarking on this area..

I note the recent Government discussions in respect of the work to rule being embarked on by the workers who feel strongly about the recent impositions in respect of pension levies, wages cuts and so, particularly in the public service. I caution the Government not to engage in infantile responses and not to threaten the stoppage of union contributions at source. We do not want a reversal to 1913 tactics. The sweat of the labourer won hard battles. Union contributions are important. Trade unions have been subject to much adverse criticism recently. Is the Minister trying to tell me that had they not been in place over the past 15 or 20 years there would not have been widespread and untramelled exploitation? Is the Minister of State trying to tell me the unions did not make a very positive contribution to the growth and recovery of this economy since the mid-1980s? Let nobody tell me they did not. It is easy to lie at this point but we will not join that chorus.

What I am worried about - Deputy Varadkar referred to it in a very important way - is that if we tackle the minimum pay issue, the JLCs and the EROs it is clear this will have implication for social welfare payment. People talk about poverty traps and every other kind of situation. That is the point. People are struggling to survive and to make ends meet on their low pay and the present social welfare rates. Are we to depress that floor further and leave those people virtually impoverished? Neither I nor my Labour Party colleagues will join the chorus or be part of the drive to lower wages to close to unsustainable levels.

I watched with interest the "Frontline" programme on which people outlined their views very clearly. Some articulated the view that the minimum wage had to be driven down. If, for example, the wages of a person aged 65, and close to the exit door, is driven down it would save 65 cents per hour, or €5.20 per day. I know what goes on in business. It is difficult and I appreciate the context. Competitiveness is difficult. However, if things are that close we will start a vicious cycle because that money is paid out by people who hope to get a return from it. According to the circular theory of money, it will return to their tills. If that is taken away we will have further deflation.

I appreciate there must be some flexibility. As Deputy Varadkar said, perhaps people might agree to work on Sundays, or if there is an obstacle to that taking place, it might be removed. I would be extremely concerned, as would my party, to join in this mad rush to try to dismantle the wage structure, particularly at minimum wage level and at the JLC or ERO levels.

The system of employment regulation orders and registered employment agreements has been in force since 1946 and most EU countries have this type of system. It is peculiar that in Britain the TUC is currently working with the Labour Party to have a similar system put in place. The purpose of bringing in the legislation is to secure the operation of a system from attack, not to undermine it. That is a very strong view as held by the Labour Party. We must not undermine the system, we must protect it. The relevance of these agreements is even more pronounced in today's financial crisis. Their terms and conditions are automatically applicable to, and can be enforced against, contractors and service providers based outside the State but operating here. As such these instruments ensure against unfair cross-Border competition, to which Deputy Varadkar alluded. Without these agreements, what we will have is a free for all in which decent employers will be undermined. That, of course, is what less than compliant employers would try to achieve. The Minister of State, Deputy Calleary, is a person in whom I have a great deal of faith and he would understand that well.

Engaging in a wage competition, particularly a cross-Border one, would be devastating. On the surface it might sound like a good strategy for an individual employer to seek competitive advantage by cutting workers' wages but soon every employer would join in, all workers would have lower wages and be unable to afford to buy anything. It is a zero sum game. That is clear. With a handful of honourable exceptions, if that were to start it would become a cascade and every employer would have to join. If we learned nothing else in the recent crisis we learned that the market will always act for short-term gain at the expense of long-term sustainability. My party wants to make that point very strongly.

I shall refer to exemptions and the inability to pay clause and wish to refer to features of the Bill. The Bill focuses on the need to strengthen the arrangement for making EROs and the registered employment agreements, REAs. That is very important. One notes that the Bill provides that the EROs and REAs will be given legal effect in future by way of ministerial order. These instruments will be now subject to Oireachtas scrutiny. In my view, they should be subject to input and amendment as proposed on the floor of the Dáil, giving the House an effective form of oversight. Input is vital to widen the democratic underpinning of the process.

It is worth noting that the JLCs are made up of representative employers and workers from particular sectors, with a chairperson appointed by the Minister. There are 13 JLCs which meet and are required to discuss and agree the rates and conditions of employment to apply to workers in the different sectors. They predated the concept of collective bargaining by some decades and therefore play an important role in putting in place a wages floor in certain sectors of the economy where wages tend to be lower than in others. As the Minister of State pointed out, these are generally in the hospitality and retail sectors, contract cleaning and hairdressing. I was enthused to learn from Deputy Varadkar the various strands in hairdressing. I have a sister in law who is a hairdresser so it will be her weekend task to explain some of these points to me.

As the Minister of State noted, there have been complaints by some firms operating certain EROs. They signified they are experiencing difficulties in particular sectors. One would hope the representative employers and employees who are participants on a JLC will take cognisance of any issues troubling that particular sector, especially at this time; that they will address and reflect upon these issues and the importance of employment maintaining reasonable wage rates which reflect the reality of the current economic environment. That is the kind of consensus arrangement I would like to see. I believe it has been achieved.

There has been useful and very positive engagement of late in this regard, especially last autumn with the agreement reached at JLC level that dealt with the hotel and catering areas. It specifically adjusted the premium rate payable from double the rate to one and one-third the rate. That was very important in the area in question. I know the Minister of State took this on board. He heard about it when he was a member of the Joint Committee on Enterprise, Trade and Employment and I was glad he consulted the Minister of State, Deputy Kelleher. This pragmatism and reflection of the new realities was likewise reflected in the agricultural and retail sectors late last year - in November and December - which facilitated the deferral of increases in minimum rates that would have been due in each of the sectors. This proves there is no need to put in place a statutory exemption or inability to pay process. The system is in place, is and has been extremely responsive and has shown itself to be so. All it needs to work is for people to point out they are not able to pay and then work within the system. Trade unions are well aware of this and have stated to the joint committee that they are very cognisant of the significant downturn and the difficulties presented. They want to play a positive role in sustaining and retaining employment.

Regarding the JLCs established in 1946, I want to pay tribute to the then Minister, Seán Lemass, subsequently Taoiseach, who ensured their competence expanded beyond the fixing of minimum rate levels to allow them also to deal with the regulation of conditions of employment. Likewise in 1946 the Labour Court assumed functions previously exercised by the Minister for Industry and Commerce. Therefore, when a JLC reached agreement on terms and conditions relevant to a particular sector it made proposals to the Labour Court which then made employment regulations orders.

Mr. Justice Henchy referred to this in 1979, alluding to the position of the 1946 Act. He basically established that this was constitutionally suspect, as it were. He was important in asserting the primacy of the Oireachtas and I salute that. It is very important that the Oireachtas is the decision-making body in respect of legislation, both primary and secondary. The position that existed patently was legally suspect as evidenced when one examines the constitutional jurisprudence of similar delegations when they were challenged. One notes that the Minister for Enterprise, Trade and Employment is reassuming the power whereby he or she will make the relevant order on foot of the agreed proposals received from the JLCs through the Labour Court. Under the legislative proposals we are debating, the Labour Court will have a more focused and supervisory role in regard to the functions delegated to the JLCs.

The laying of a statutory instrument before the Houses of the Oireachtas is of paramount importance. I have argued at every opportunity the importance of a statutory instrument coming before the Oireachtas in order for Members to have the opportunity to debate it, as they should. I call for a debate to be held on every statutory instrument laid before the House, if only for 15 or 20 minutes. This could happen in committee. A statutory instrument might be laid before the Oireachtas and then formally transferred to a committee for debate. That is important because it will allow Members to have an input.

There is no point referring to European legislation, etc. We have brought forward domestic legislation and people have sometimes known less about it than they did about the original European directives which gave rise to its introduction. That is because they did not have the opportunity to participate and make positive suggestions with regard to improvements which might be made.

REAs have been in force since 1946. They are the outcome of a process of collective bargaining, which culminates in an agreement that can be presented to the Labour Court. If satisfied with the contents and thrust of the proposals made in an REA, the court will duly register them. This has the consequence of making an agreement legally enforceable in respect of the class, type or group of workers to which it applies. Of course, an REA applies to everyone in a particular sector, irrespective of whether a worker or employer is party to it. This gives rise to difficulties and may make these agreements subject to challenge in the future. As a result of the far-reaching consequences of these agreements, the Minister is again assuming authority to make or vary agreements rather than allowing the Labour Court to act.

Section 23 of the Industrial Relations Act 1990 contains a definition with regard to what constitutes a "worker". This is being amended in the Bill before the House, which allows workers other than teachers to have access to the Labour Relations Commission, the Labour Court and the rights commissioner. That widens the definition to which I refer and it is only, as Deputy Varadkar stated, achieving what should have been done in the past. Henceforth, it will only be possible to change the definition further by means of primary legislation. That is both important and correct. It will get rid of the anachronism which permitted amendments and definitional changes to be affected simply by order.

I recall that when I was a law student I was often bamboozled by the plethora of mechanisms that were available in respect of obtaining resolutions to disputes of various kinds and also by the archaic and arcane language that was used in legislation. It is time we consolidated or codified the law as it relates to employment. Such law is an absolute nightmare for a practitioner but for a student it is doubly so. It would be to the benefit of everyone - students, practitioners, employers and employees - if the law was consolidated.

The Minister of State proposes the introduction of the inability to pay mechanism in order to put in place a counterbalance to existing statutory wage fixing procedures. During one of his first public outings - I seem to recall it was on home territory at the MacGill summer school - the Minister of State made a foray into the realm of industrial relations and promised this amendment to take cognisance of the serious difficulties employers have indicated they are experiencing under REAs and EROs.

I accept that difficulties exist but it appears to be one-way traffic in this regard. I do not live in an ivory tower and I am aware that such difficulties - which were outlined to the committee of which I am Chairman - can arise. However, there does not appear to have been any trade union input into the legislation. During his contribution, the Minister of State undermined his own arguments when he illustrated vividly, clearly and concisely how consensus and agreement came about in respect of particular sectors and when he indicated that certain employers were not obliged to pay the required amounts laid down under the terms of EROs, in particular.

The inability to pay amendment provides that an employer can apply to the Labour Court for an exemption from the requirements of an ERO or REA in line with section 41 of the National Minimum Wage Act. As I understand it, trade unions have not been involved in any discussions in respect of this matter and they would not be happy with any proposal to agree the inability to pay exemption. The unions are concerned with regard to the proposal and believe it to be misguided in its conception. They note that allowing exemptions will encourage and reward unfair cost competition because companies will tender - even in respect of public procurement - on the basis of those exemptions. This will have the effect of increasing every company's inability to pay because if a company factors into its tender the full rate relating to an REA or ERO, it will be placed at a disadvantage when compared to a company which has an exemption. I refer in this regard to security, catering and cleaning companies in particular.

This is a matter of grave importance. I acknowledge that the Minister of State is trying to deal with a problem at one end of the scale. However - and I do not intend to be a smart aleck in saying this - in doing so he may create a major imbalance at the other end. Ultimately, this could lead to huge problems arising. While he is trying to save jobs at one end, he may create a cascade of unemployment at the other.

The safeguard that an employer will only be granted an exemption once can be avoided by recasting a company and thus easily disguising repeat applications for exemptions. This is a matter of concern, particularly in view of the position relating to contracting and subcontracting practices and the "phoenix" syndrome - which was discussed by members of the Joint Committee on Enterprise, Trade and Employment and Mr. Paul Appleby, the Director of Corporate Enforcement last week - that apply in respect of the construction sector.

The likely method to be proposed in respect of establishing an inability to pay will be that the Labour Court must be satisfied that an employer is unable to pay and would be likely to lay off workers or terminate their contracts. As a result, it will be much easier for contractors in poorer EU member states to establish an inability to pay and this could give rise to unfair and inappropriate cross-border competition. A great deal of consideration must be given to this aspect of the matter.

Any safeguards which might be put in place would be a sham and could be easily avoided. If the proposal is to provide that the majority of workers will be obliged to agree to the exemption, it will offer little protection in employments where there is no trade union representation. What will happen in such circumstances? It is easy to imagine the type of pressure that could be exerted on workers to agree to their employers being given exemptions. For example, in a firm with 20 employees, 12 may be in agreement with seeking an exemption while the other eight may not. What will happen then? The answer is that those who oppose the exemption would still be obliged to agree with its being sought or else they could become isolated.

The Minister may or may not include a limit on the amount below that contained in an ERO or REA which the Labour Court will exempt an employer from paying or providing. There are particular concerns with regard to how reductions or outright exemptions will interact with pension obligations and other entitlements set down in agreements. What will inform an inability to pay exemption application? What will such an application cover? Will it be premium rates, overtime rates or other rates?

It is worth making the point that REAs are collective agreements for the purposes of international law and, as such, are protected by International Labour Organisation, ILO, conventions. Governments must refrain from undercutting or undermining the activity of workers joining together to pursue the common goals of negotiating conditions and terms of employment. The ILO has found that interventions by the legislative and administrative authorities which have the effect of annulling or modifying the content of freely concluded collective agreement, including wage clauses, are contrary to the principles of voluntary collective bargaining. It would be better if the Government promoted collective bargaining - as it is required to do by the ILO - rather than undermining it.

As already stated, there has been negative commentary in respect of trade unions only looking after themselves, etc. However, I am of the view that they are correct to highlight the issues to which I refer. Under the agreements in question, all workers - even those who are afraid to join trade unions - benefit. That is why employers are sometimes so opposed to them.

There are many elements which must be taken into account in respect of this matter. I am aware, for example, of the principles that will come into play in respect of section 8 and of which JLCs will be obliged to have cognisance. I applaud the developments that are proposed in this regard because it is about time that transparency was introduced. It is good that these principles are being outlined in statutory form. Everyone's cards will be on the table in the future and this will make matters so much easier. I congratulate the Minister of State on what is being done in this regard.

I have a number of concerns in respect of the legislation. However, one of these has been laid to rest as a result of the judgment in the case of Mulcreevy v. the Minister for the Environment, Heritage and Local Government, which states that all future changes in the definition of "worker" will, as I previously pointed out, have to be made by means of primary legislation.

Section 11 sets out the improved procedures to be followed when formulating proposals for an ERO. Henceforth, the chairman of a JLC shall forward to the Labour Court, in addition to a report on the circumstances surrounding the adoption of such proposals, copies of all written submissions and all or any other documentation considered by that JLC in formulating its proposals. In the future, the Labour Court will be obliged to consider the material forwarded to it when it is considering JLC proposals and may hold hearings at which objections to such proposals may be raised. That is an important development.

Section 12 indicates that the term of office of the chairman shall be five years and that he or she shall be obliged to retire at 65. That is as it should be.

It should always be remembered that EROs and REAs are enshrined in domestic law and that our laws governing the application of the minimum wage are in accordance with the principles of the Lisbon treaty. These agreements are basic and fundamental employment standards under the relevant EU directive. They are therefore directly applicable to and are capable of being enforced against contractors outside the State. It is important that we do not now take a step that would undermine the basis of what has been achieved and which was very important in terms of what was set out in the Charter of Fundamental Rights in the Lisbon treaty.

Why is there a differentiation in the applicability of JLCs across the country in determining the appropriate redress in a particular sector so that the same rate in that sector would apply in Mayo, Westmeath and Cork as applies in Dublin? This is one of the great mysteries. Everything that adds complexity gives an opportunity for it to be undermined or attacked. The more we simplify matters such as this the more progress will be made and the more acceptable it will be. While I know the Minister of State has much work to do, I urge him to review the matter sometime. As Deputy Varadkar said, this might have been an opportunity to adopt a uniform mechanism across the country. Arguments have been made over the years that it costs more to live in a city. From my knowledge of people coming up from my area, I can understand where that comes from. It is a matter that needs to be reviewed.

I believe some 67 registered employment agreements, REAs, are maintained by the Labour Court. I would love to know how many of these have ever been examined or reviewed in the past five or six years. We know that the JLCs predated the introduction of the National Minimum Wage Act 2000. I would like to see a survey of the JLC rates that govern EROs and compare and contrast them with the current minimum wage of €8.65. That would be an interesting exercise. The vast majority of them are slightly above 60 cent and may be €1 at most.

I referred to Article 27 of the Charter of Fundamental Rights in the Lisbon treaty which enshrined the right to collective bargaining. I would be very wary and cautious about taking any steps that would undermine that provision.

Deputy Varadkar mentioned the separate JLCs in the catering sector, one for the greater Dublin area and one for elsewhere. I know they are to be merged. However, last Sunday in the course of a wide-ranging review the Taoiseach indicated that labour unit costs had reduced by 7%. I am sure I heard him rightly. That is the prediction and it is important for competitiveness for the small and medium-sized industries whose cause we have always supported. Many small businesses and shops providing two or three jobs are vital to those areas. Two or three jobs in a small rural village is like a factory employing 30, 40 or 50 people; they represent the lifeblood of those areas. Keeping people in those areas is vital and ensures the viability and sustainability of the churches, schools, the football, soccer, rugby and hockey teams, and all the things that go to sustain rural infrastructure.

Given that there has already been a significant reduction, which is very important for international competitiveness, the country needs to get back exporting. We have had the Forfás report which the Minister of State has studied. We are now going the right way. We need to ask whether this is a race to the bottom. Will it be a zero-sum gain with all the pain carried by workers who have very little more to give and have given much already? It must be recognised that they paid a pivotal and constructive role in economic recovery from 1987 onwards. Many of them are still playing a constructive role in that they are paying whatever is left of their wages in exorbitant mortgages they secured to pay the outlandish prices for houses. Having done that we are now asking them to consider taking off another 50 cent, 60 cent or €1 per hour. This is an area in which we must tread very warily.

See this speech in context