Richard Bruton (Dublin North Central, Fine Gael)

The review of the joint labour committee, JLC, and registered employment agreements, REA, mechanisms was initiated on 8 February 2011 last and is being undertaken jointly by Mr. Kevin Duffy, Chairman of the Labour Court acting in an ad hoc capacity and Dr. Frank Walsh, School of Economics, UCD, under specific terms of reference. Deputy Calleary was party to their appointment and I recognise his work on this.

The review is a commitment under the EU IMF programme, which provided not only for agreement on the terms of reference but also the programme of actions arising. Public notices were placed in national newspapers in early February and key stakeholders were contacted to seek submissions by 25 February last. I understand that the review team subsequently met a number of stakeholders to discuss their submissions. These are being analysed by the review team.

The programme for Government provides for a commitment to reform the joint labour committee structure, beginning with the appointment of independent chairpersons to JLCs, who will retain a casting vote. Reform options requiring examination include the rate of pay for atypical hours, such as Sunday premia.

We need to ensure that statutory wage fixing mechanisms work effectively and efficiently and that they do not have a negative impact on economic performance and employment levels. Ireland is the exception in Europe in having a combined system of highly centralised bargaining, a relatively high national minimum wage and further higher sectoral minima that are decided by joint labour committees and extend to entire sectors. No other European country has such a complex web of wage determination mechanisms. It is hardly surprising, therefore, that these long-established mechanisms came under strain against the background of a severe contraction both by international and historical standards. While firms in sectors covered by JLCs and REAs may have been able to sustain high rates of pay when demand was strong enough for high labour costs to be passed on, this proved to be more problematic when these sectors experienced a major collapse in demand.

It is important to note that employment regulation orders, EROs, and REAs cover more than rates of pay. In many cases certain conditions of employment are also governed by the agreements. As well as pay-related issues such as overtime and Sunday working rates, certain agreements include clauses relating to travel expenses, annual leave, dispute resolution, and board and lodging. These additional clauses may impose rigidity in the labour market and some have been superseded by economy-wide employment legislation.

Perhaps of most concern is that EROs and REAs impose rigidity that reduces the flexibility of the labour market to adapt in times of difficulty. The rate of adjustment of a number of the sectoral agreements, for example in construction, retail, hospitality and agriculture, to the current economic crises, while welcome, has been slow. Reform of these systems is necessary to ensure a flexible labour market.

I expect the review will be completed and submitted to me before mid-April and will then be published. I intend to engage directly with the European Commission on its contents and report to government on my proposals for follow-up action, including making any legislative provision which may be necessary.

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