Richard Bruton (Dublin North Central, Fine Gael)

I propose to take Questions Nos. 1 and 5 together.

On 24 May last, the Government decided to publish the Report of the Independent Review of Employment Regulation Orders and Registered Employment Agreement Wage Setting Mechanisms. The report's overall finding is that the basic framework of the current JLC-REA regulatory system requires radical overhaul so as to make it fairer and more responsive to changing economic circumstances and labour market conditions. The report of the independent review does not recommend, nor have I proposed, specific adjustments in wage rates for the sectors covered by JLCs and REAs. The proposal by the Government to retain the joint labour committee structure, along with the restoration of the recent cut in the rate of national minimum wage, together represents a significant commitment by the Government to low paid and vulnerable workers in the economy.

Of course, the most vulnerable workers are those who have just lost, or are just about to lose, a job. We have a duty of care to protect existing employment in enterprises that are hanging by a thread and to incentivise employers to take on new workers where possible. Ultimately, the best way out of poverty for any individual is to have a job. The report states that there are potentially substantial competitive gains that could be realised in some of the affected sectors by reforming the structure of decision-making in JLCs so that the system is more flexible and responsive to the needs of particular sectors. Competitiveness can also be enhanced by simplifying the system in a way that reduces the burden of supervision and compliance and by providing a degree of co-ordination and oversight over the system that ensures that arrangements across sectors are reasonable and proportionate.

Accordingly, the JLC system must be made more responsive and become more fit for purpose in the context of a modern economy. The benefits of retaining these sectoral wage-setting mechanisms cannot be outweighed by economic and competitiveness penalties incurred as a consequence of a lack of responsiveness, coherence and precision in both EROs and REAs. The report underlines these deficiencies once again and it is now time to signal that decisive action will be taken to remove them.

The sectors and occupations where the greatest job losses have occurred in the economy generally coincide with the sectors where the minimum wage and sectoral agreements are most prevalent. In the past three years, there has been a 60% loss of employment in construction and 15% in the retail and wholesale sectors. While demand in these sectors is clearly a key factor, labour costs represent a relatively high proportion of total costs in these locally traded sectors. The sectors which are hardest hit by the economic collapse are particularly labour intensive, and the impact is badly felt by workers. Too often employers have chosen to let workers go instead of looking at other options. Retail, hotel and catering have seen a 20% loss in employment in the past three years.

The Government believes tourism is a real opportunity, and we must be competitive with our neighbours. If we can find a way of increasing economic activity in these labour-intensive sectors, there is a large group of people who can immediately be brought back into employment. Action that we take in these areas can have an immediate impact on dole queues, and that is why we are prioritising it.

I am, therefore, anxious to pursue the agenda for radical reform in this sector as a matter of urgency. To this end, I have set out an outline of my proposals for that agenda to the social partners, and these have already been the subject of discussion with the Construction Industry Federation, IBEC and ICTU. I have also heard the views of other employer bodies and groups representing vulnerable categories of workers, including migrant workers. In accordance with the terms of the EU-IMF programme, discussions have also taken place with representatives of the troika.

It is my intention to complete discussions with relevant parties in the coming days with a view to submitting a final action plan for consideration by Government before the end of the month. The detailed plan will seek to implement far-reaching reforms of the current system, including making any legislative changes that may be necessary.

See this speech in context