Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity of speaking on the Industrial Relations (Amendment) Bill. I have sat here for the past while listening to the Sinn Féin representative, Deputy Caoimhghín Ó Caoláin. I disagree with one or two aspects of his remarks and I will deal with these later in the course of my contribution. I agree with the amendments proposed as a result of discussions in the Seanad. Perhaps the Deputy did not intend it - I give him the benefit of the doubt - but essentially what he began here was a veiled attack on the Labour Court. Perhaps it was not his intention, but it is what he did and what he put on the record of the House. He said he was opposed to the amendments allowing employers to claim inability to pay. He said they would create a mechanism for the Government to reduce pay rates. It is the Labour Court that will decide on these matters. By saying the Government will get its way when an employer makes a claim, the Deputy is essentially saying, although perhaps inadvertently, that the Labour Court is a puppet of the Government. Nothing could be further from the truth. I defend the integrity and impartiality of the Labour Court.

The gist of what Deputy Ó Caoláin was saying about amendments on the inability to pay is that, once an employer lodges a claim, he, the Government and right-wing economists will get their way. The Deputy has obviously lost confidence in the Labour Court's ability to assess the facts, adjudicate on them, seek all the relevant financial information and make an impartial judgment. I have confidence in the ability of the Labour Court to adjudicate on these matters. What Deputy Ó Caoláin is saying is almost like saying that one who makes an application for planning permission is guaranteed to receive it.

I look forward to the Labour Court adjudicating fairly on cases. Where it does not accept the statements by employers regarding inability to pay, I hope it will adjudicate impartially and ensure pay rates are not reduced at the request of the employer.

I have seen cases of hardship or inability to pay and regarded them as requests to retain the ability to employ somebody rather than requests to let an employee go if rates cannot be met. There will be a hard choice to make. An employer may say he cannot afford to pay at the full, official rate and would like to retain a staff member in employment. The employee may want to be retained in employment. If both are agreeable, the Labour Court may agree, in some cases, to a reduced rate. I consider employers' claims as claims to be allowed the ability to pay and employ people rather than to let people go. This could happen if an employer either wanted to pay at the full rate or not at all. The legislation addresses this.

The main purpose of the Bill is to strengthen the existing system for the making of both employment regulation orders and registered employment agreements and to provide for their continued, effective operation. The Bill also provides for the amendment of the definition of "worker" under the Industrial Relations Act 1990. It is a complicated area and many Members have used words interchangeably and are still a little confused about joint labour committees, employment regulation orders, joint industrial councils, registered employment agreements and what flows from what.

Section 3 provides for a new definition of "registered employment agreement" to differentiate between those made before the commencement of the original Act, that is, those registered by the Labour Court, and those made after the commencement of the Act, which will be confirmed by ministerial order.

Section 4 provides for the confirmation by order of a registered employment agreement by the Minister. Following receipt of a copy of an agreement, the Minister shall make an order confirming the terms of the agreement. The standard legislative provision will apply.

Many Members have spoken at length about the joint labour committees. I am sure the Minister has the figures pertaining to those covered by these committees. There may be 200,000 to 400,000 but I am not quite sure. The number is substantial. Those covered comprise a small, but important, minority of the Irish workforce. I would not like anyone to believe the issues about which we are talking have widespread application in the workplace and affect the majority of the 1.9 million or 2 million in employment. Approximately 20% of the workforce will be affected. Many of those concerned are not well organised and do need protection.

Section 7 provides for a new definition of "employment regulation order" to differentiate between those made before the commencement of the Industrial Relations Act 1946 and those made after the commencement of the Act.

Section 8 provides for the principles and policies to which joint labour committees must have regard when formulating proposals to submit to the Labour Court for employment regulation orders. A joint labour committee must have regard to the legitimate interests of the workers and employers, the prevailing economic circumstances. Only in a fools' paradise would one believe we do not have to take account of the current economic circumstances. Regard must also be had to the employment circumstances of the workers and the prevailing commercial circumstances of the employers.

Last year or some time before that, most Deputies received many representations on joint labour committees. I have a major problem with them and do not know if it is being addressed in this legislation. Neither side at joint labour committees was representative of the people it was supposed to represent. Many employers, especially in the catering area, contacted various Deputies after a visit from the National Employment Rights Authority and stated they were shocked to hear there was such an entity as a joint labour committee. I refer to businesses that might have been set up in the past ten or 15 years. Nobody from the employers' side who purported to represent the businesses on the committee ever made contact with them. The businesses were not even aware there was such a representative.

I question the setting up of structures that we do not audit on occasion to verify that those coming to the table have received a mandate from those whom they are supposed to represent. This has been causing a big problem. I find severe fault with the employers' representatives on the committees. Irrespective of the branch of IBEC they were from, they were not fulfilling the role they were expected to fulfil at the negotiating table, which role should have involved their consulting their members. They could not have done so because practically no member covered by some of the joint labour committees was even aware of the committees' existence or of the identity of their local representative. Shame on the employers in that regard.

I have a firm view on those on the other side of the negotiating table and am equally critical of them. I am pointing out the deficiencies of the past that I would like to see corrected. Members have already referred to trade union membership. There are approximately 1.9 million people in the Irish workforce, approximately 300,000 of whom are public servants, all of whom are in trade unions. In the private sector, there are approximately 1.6 million employed. The total union membership is in the order of 600,000, which means there are 300,000 union members in the private sector. It is quite clear, therefore, that the trade union movement represents significantly fewer than 20% of the workforce. I am critical of the trade union representatives on the joint labour committees because, by definition, they do not represent over 80% of workers. Many of the people employed in the various industries about which we are talking in respect of the joint industrial council are not unionised in the first instance.

On the basis of these statistics, one must consider the legitimacy of the bargaining mandate on both the employer and employee sides. This is one reason there were difficulties over recent years. People who were removed from the coalface were representing the employer side on the ground, including employers in small restaurants, hotels and pubs producing food. Similarly, the spokespeople on the employee side were not representative of those actually working in those establishments. This is probably why some of the agreements got out of hand, contained a few anomalies and were not representative of either side.

One of the big anomalies I discovered was that, where an employer wanted to employ an individual, a student, for example, at the weekend, the previous agreement stipulated a premium rate should be paid on Sundays. That was accepted across the board. The rate was reduced recently in the catering sector to make it more competitive.

This matter does not merely relate to employers and employees. The public is also involved. The service to the public was reduced because employers closed establishments which sell food on Sundays because they were not prepared to pay the excessive rates set down under previous agreements. In circumstances where owners paid these rates and passed on the cost to their customers, the price of Sunday lunch was excessive for some families and they were obliged to stop going to the establishments in question. Business decreased as a result and some people lost their jobs.

Excessive rates of pay were agreed in the past. I am not referring to the minimum wage in this regard. I may be in a minority on this side of the House but I am of the view that the minimum wage should be sacrosanct. The minimum wage is set at €8.65 per hour. If a person is unemployed, he or she will receive €200 per week for not going to work. I accept that people are entitled to this rate of social welfare, which, based on a 40 hour week, is approximately €5 per hour. A person in receipt of the minimum wage is, therefore, only paid €3.65 extra per hour for doing 40 hours per week. He or she may be obliged to travel to and from work and to bring lunch with him or her. I would not agree with any reduction in the minimum wage at any stage.

During the past year I have been critical of many well paid professionals who stated that the level of the minimum wage is one of the problems with which the economy is afflicted. Some of these individuals earn more in one hour than people on the minimum wage earn in a week. Certain of the comments made by these well-paid professionals and many Members of the House in this regard have been reprehensible. I have been obliged to challenge the views of some of these people during conversations relating to this matter.

I accept that some of the rates of pay agreed in respect of certain trades in the construction area are excessive. Reaching agreement on these rates was just plain wrong. The rates to which I refer were not merely overly generous, they were illogical in nature.

Paying premium rates on Sundays is fine, as long as those to whom they are being paid have done a week's work. If individuals have worked 30 to 40 hours during the week, they should certainly be entitled to be paid such rates. I understand, however, that if a student employed in his or her local chip shop works on Sunday having only worked six hours during the remainder of the week, he or she must still be paid the premium rate for the first hour's work in the week. That is wrong. A person should be obliged to work a minimum number of hours before he or she is entitled to be paid an overtime or premium rate. The concept of paying such a rate in respect of someone's first hour of work is not great and is preventing some employers from taking on official part-time employees at weekends because they must pay this rate even though said employees may not have worked any hours from Monday to Saturday. This matter must be examined in practical terms.

I wish to provide an example as to why some rates of payment were not only uneconomical but also illogical. I refer to the social and affordable housing that has been build under the Part V provision, which was designed to ensure that there would be a social mix in new housing estates. Part V provides that a developer or builder who is building houses and selling them to the local council under the affordable housing scheme is entitled to charge the cost plus a profit margin of up to 15%. The legislation does not stipulate that they must receive 15% but, by and large, this is the benchmark paid to them. A builder in Portlaoise explained to me how the system operates. Under the approved rates relating to the construction industry, a person who is a construction operative class D and who might only be employed to sweep the floors of new houses is entitled to €14.88 per hour. An individual employed to sweep the floor of the local shop only receives the minimum wage of €8.65. The builder with whom I spoke wanted to know why he should be obliged to pay someone €14.88 per hour to sweep the floor of a new house when that individual's brother or sister might be paid €8.65 for doing the same job in the local shop. In my opinion, it is illogical to pay €14.88 per hour in such circumstances. That is what has brought some of these arrangements into disrepute.

I wish to discuss the logical consequences of what happened in Portlaoise. There will be similar consequences in Monaghan, Castlebar, Ballina and every other provincial town. The production costs incurred by the builder to whom I refer in Portlaoise must, as a result of it being a public contract, be based on the officially agreed construction industry rates. This means that €14.88 is the lowest rate that can be paid to anyone who carries out work on the site. Obviously, higher rates apply in respect of craftspeople. When the builder calculates the cost of building social and affordable houses for Laois County Council and adds a profit margin of 15%, the actual price - including the legitimate profit margin provided for in legislation - is €170,000 per house. The market value of such a house in Portlaoise would only be €130,000.

The builder in question is, therefore, obliged to charge the local authority €170,000 for a house that can only be sold for €130,000. The Part V provision obliges the council to pay him the construction cost plus a profit margin with no regard to market value. Though well intentioned, the Part V provision was somewhat naive in nature because it was designed on the assumption that prices would always be higher than the cost plus a profit margin. Those who drafted the provision never conceived that prices might drop. Part V is actually perverse in nature, particularly when house prices are dropping and when market values are lower than the officially approved construction rates.

The council has objected on every occasion to paying a price above the market value but the builder in question has won out each time because the law in this regard is black and white. This is an example of artificially high approved rates which are not based on local market conditions producing a cost that is higher than the market value. Taxpayers are losing out in this situation and, ultimately, that is to no one's benefit.

The Minister of State, Deputy Calleary, and I discussed a particular matter at a meeting of our parliamentary party earlier this week. In the past I have criticised the excessive nit-picking of the National Employment Rights Agency, NERA, in respect of certain inspections. If a person works in a hotel and if, due to the fact that a wedding was taking place there, he or she does not go home until 12.45 a.m. on Sunday, different rates of pay apply. This may be the law but there comes a point when this must be viewed as nit-picking. However, there is a role for NERA to play. I tabled a motion at our parliamentary party meeting, which the Minister of State commented upon and which was passed, which recommends that compliance officers inspect building sites operated by those who were awarded publicly-funded contracts to construct schools, schemes of houses or roads in order to ensure that the approved construction industry rates are being paid to employees.

If a builder is awarded a contract on foot of a tender based on a high price and then pays his employees at half rate, he is pocketing taxpayers' money. This type of behaviour drives down wages. In such circumstances, the taxpayer is paying the full, approved tender price. I want compliance officers to be appointed to inspect projects relating to publicly-funded contracts in order that we might ensure that the full rates of pay are being paid to employees by contractors and sub-contractors.

I look forward to the legislation being progressed through both Houses.

See this speech in context