Willie O'Dea (Limerick City, Fianna Fail)

The JLC system was introduced by Seán Lemass via the Industrial Relations Act 1946. The original purpose of the scheme was to protect people who did not have access to the normal method of collective bargaining based on trade union representation. In today's Ireland, it covers migrant workers, part-time workers and women who are compelled to work in low paid jobs such as waiting and cleaning because their husbands have lost their jobs. My objective is to achieve the best possible deal for these people. CSO figures indicate that the average wage in the JLC sector is €300 per week. These are the people at the bottom of the heap. Last week we debated the issue of agency workers, who constitute a very different category to those affected by the Bill before us.

We all agree that the JLC system needs reform if it is to be made more efficient but some of the arguments for reform have relied on the myth that reducing pay at the lower end of the scale creates employment. Irish businesses have been failing not because of pay levels but due to an unprecedented collapse in consumer spending. In some cases, the collapse has been ten times greater than other eurozone countries. Reducing further the wages of low income workers will result in a further drop in consumer spending and, ultimately, job losses and lower economic growth. These workers spend all their income and consequently a cut in their wages will inevitably mean a drop in demand, higher unemployment and a bigger bill for social welfare.

All the recent economic studies dispel the myth that cutting wages at the lower end creates additional employment. There is no evidence to support the theory that minimum wages have a negative effect on employment in the sectors to which JLCs apply. European Commission data reveals that Irish labour costs in the food and accommodation sector are 6% below the EU average. These costs are based on 2008 figures and the gap has since widened because labour costs in Ireland have fallen or remained flat while costs in other EU countries have increased. Ireland suffers from some of the most significant levels of low pay in the eurozone and most of these low paid workers are in sectors covered by the JLC.

I observed the Minister's reaction to the debates that have taken place on the Bill and I listened carefully to the contributions by Deputies on the previous two Bills. It is clear that a significant number of Members from his party would prefer to consign the JLC system to history. I suspect he shares that view but I understand the exigencies of coalition Government. I do not suggest people are not entitled to their points of view but it just happens that I profoundly disagree with them regarding this cohort of workers.

Anybody who follows the debates surrounding the Bill or the various statements that emanate from the Government would have to conclude that the thrust is towards the contraction and eventual abolition of the JLC system. I recently met representatives of an organisation called the Coalition to Protect the Lowest Paid and they gave me a copy of the ten point action plan they are submitting to the Government. The coalition is concerned to ensure that workers do not lose protections as a result of the rationalisation of the JLC system. The ten point plan suggests that legislation should provide for the possibility of creating new JLCs to cover new situations that are not envisaged at present. Anybody who expects to see new JLCs will be sadly disappointed, however, given the Government's desire to consign the entire system to oblivion.

The coalition made several valuable points to which I will briefly advert. In regard to legislation on permitting JLCs to set a basic adult rate and only two supplementary minimum rates, it points out that the one size fits all approach does not always work. In this case, it may limit the effectiveness and flexibility required to address the concerns of both workers and employers.

It argues for the provision for achievement of skills in supplementary rates above the adult basic rate in certain JLCs. It also draws attention to an area of potential exploitation in training rates where new workers are paid below the basic rates with little ability to access higher rates for their skill sector. The coalition proposes that training rates be permitted only to give workers access within a defined period to the achievement of skills commensurate with higher rates. I support that proposal and will bring amendments on Committee Stage to amend the Bill accordingly.

In respect of the regular reviews that will take place under the Bill, the coalition argues that representatives of employers and employees must be able to raise issues and reach agreement on a consensual basis. Confrontation will ensue if arbitrary decisions are imposed on people.

While it has no difficulty in reducing the record keeping requirement for employers on EROs and REAs - and I am all for this - it argues that employers should be compelled to maintain sufficient records to allow monitoring of their compliance with legal obligations to their workers.

Shortly after the Minister took office he outlined his thinking on JLCs. His proposals differed significantly from those set out in the Duffy Walsh report but because of whatever has happened in between and, I presume, political pressure from his partners in Government, he has apparently moved much closer to that report. One must ask, however, how much he agrees with it. There are several significant differences between the Bill's provisions and the recommendations of the Duffy Walsh report. While the report recommended the inclusion of an inability to pay clause, it advised that derogations should only be granted where the alternative was a substantial loss of employment or distortion of the marketplace. The derogation granted by the Bill appears to be considerably wider. It can, for example, be granted based on the notional long-term sustainability of an enterprise or if the Labour Court is influenced by any other matter that it considers relevant.

We should not forget this debate concerns the wages of people at the bottom of the pay scale. The Government is reluctantly maintaining the JLC system. Nevertheless, it is allowing employers to opt out of whatever small wages these people are being granted. The Labour Court can consider not just the long-term sustainability of the business, the imminent loss of employment and distortion of the market, but any other matter it considers relevant. That is very wide. I need hardly add that the Duffy Walsh report suggested that the derogation should be given for a period of 12 months. The Bill gives it for two years, which is a considerable change.

The Duffy Walsh report also proposed, as we did ourselves, principles and policies which must be taken into account when formulating proposals for a JLC. Section 12 of the Bill deals with this. It seems to me that the principles proposed in the Bill are quite restrictive and will severely limit the flexibility of JLCs to act in the best interests not just of their own sector but of the economy as a whole. The Coalition to Protect the Lowest Paid, which I spoke about a moment ago, suggested a number of additional principles and policies. As the Minister has already indicated his intention to amend this section of the Bill on Committee Stage, he might consider these. The coalition proposes, for example, that one of the principles to be taken into account should be the impact on working poverty and adequate income. It states that appropriate rates are needed, not only to ensure that the principles of social equity are maintained, but to ensure that people will take up positions in the industry. Wages set at too low a level can result in labour market distortions. Another principle or policy it suggests is to do with consumer demand. It states that to ensure the economy is not harmed by wages so low that they undermine the purchasing power of the workers affected and therefore reduce demand in the economy, Exchequer finances and the social protection budget should be taken into account. It makes the obvious point that deteriorating wage levels will have an impact on tax and, as a consequence, on social welfare.

The other thing that concerns me about the principles and policies outlined by the Minister is that the general level of wages in comparable sectors, including sectors outside the country, can be taken into account when setting wages. What does this mean? What countries can be used in this comparison - the United Kingdom, which is the only country with which we have a common landmass? Can a hotel in Skibbereen be in competition with a hotel in Belfast? The wording seems to be wide enough to allow comparisons not only with the United Kingdom but also with countries on the European mainland and perhaps anywhere in the world. One could argue quite logically that a person who gets out of bed in the morning in California and decides where to go on holidays could just as easily choose Tahiti or Timbuktu as Ireland. The concept of comparable jurisdictions including those outside Europe is a strange one, and this will have to be tightened up and pinned down on Committee Stage.

Then there is the question of the Sunday premium, which is now gone. The Minister says he wants to give workers their rights under the Organisation of Working Time Act, but they have had those rights since 1997. What he is saying is that he will introduce some sort of statutory code to give guidance to the Labour Court on what this Act means. We could find that it is far better to let the Labour Court make up its own mind on what this Act gives workers rather than to take away its flexibility by imposing some sort of quasi-statutory system. In any case, the Sunday premium is gone. The 1997 Act itself recognises that Sundays are different. We have had to put up with an awful lot of guff since this debate started about how the meagre payments workers in this sector are getting for Sunday work are destroying the economy. We are told they are massive payments - people are coming up with the most extraordinary examples - and that the system is totally inflexible and cannot be changed. The hotel sector, of its own accord, changed the ERO governing that sector to reduce the standard Sunday work premium from time and a half to time and a third. I am not quite sure whether it was double time originally, but anyway, it was reduced to time and a third. Many of the people affected are working for €10 an hour. One third of ten is three. Let us say somebody is working for four or five hours on a Sunday - that is €50 before tax. Is this what is bringing down the economy? I very much doubt it. The vast majority of people who work on a Sunday are now subject to time and a third, but there is a substantial cohort of people who, because they are rostered for a seven-day week, are working for a flat rate on Sundays. When this debate took place in the UK in the early 1990s, there were the same sorts of suggestions, largely from employers' groups. The Sunday premium was abolished in the UK in 1993, but this did not create one single job.

I am surprised that the Labour Party so tamely accepted the dismantling of the Sunday premium, given that the people who are benefiting from it are those who are right at the bottom of the pay levels - and it was pretty meagre anyway in the overall context of labour costs in this country.

Another aspect of the Bill which quite frankly disturbs me is the new involvement of the Minister. In the judgment in the fried chicken case, to which the Minister adverted, the High Court held that these JLCs were making what were tantamount to laws. It said they were doing something very important but were not governed by any principles. The JLCs were so important that they had the final say in these matters - or at least, the Labour Court had the final say. The High Court made the point that there was no reference to the Minister; the Minister did not have to sign off on decisions. Anticipating trouble, the previous Government, in the Industrial Relations (Amendment) Bill 2009, which unfortunately did not become law, introduced involvement by the Minister. Section 9 of that Bill states that when something is all agreed and sanctioned by the Labour Court, the Minister shall, as soon as practicable after receiving a copy of the proposal - that is, the ERO - from the Labour Court, make an employment regulation order. The Minister did not have a substantial impact; his role was pretty passive. The aim was to provide that when a proposal had been agreed and sanctioned in whatever form by the Labour Court, it would go to the Minister and enjoy the authority of ministerial authorisation. It would have the ministerial stamp. It was not in any way suggested in the 2009 Bill or any of the Bills we put forward in Opposition that the Minister should have any greater say in the matter. With all due respect, the employer and workers on the one hand and the Labour Court on the other have all the requisite expertise. The 2011 Bill, which we are discussing, states in section 12 that the Minister will sign off on proposals. Of course, the 2009 Bill provided, and my Bill should have provided even if it did not, that the order would be laid before both Houses of the Oireachtas and a resolution proposing to annul it had to be put forward within 21 days. The Oireachtas had the right to annul it within 21 days if an appropriate resolution was put forward. However, there was no suggestion that the Department would have this all-encompassing power to say "yea" or "nay".

When I first looked at section 12 of the Bill I realised it is not just a question of the Minister signing off or being passive in this case. The first part of the section provides that the Minister will sign off when he or she is satisfied that sections 42A and 42B have been complied with. Sections 42A and 42B deal with the procedure to be followed when formulating an ERO and what must be taken into account when doing so. That is not too bad, even if it is going a great deal further than was ever envisaged. The Minister is being asked to second guess the Labour Court, as it were, as regards whether proper procedure has been followed and all the matters stated have been taken into account.

However, when I read further I was flabbergasted, to say the least. In addition to that, the Minister can simply turn down a proposal for an ERO if "he or she considers it appropriate" to do so. A later section in the Bill provides that the Minister must give reasons in writing to the Labour Court. That reminds me of the Director of Public Prosecutions, DPP, giving reasons for prosecuting or not prosecuting a case by simply writing that he or she decided to prosecute because he or she considered there was enough evidence to secure a conviction or that he or she had decided not to prosecute because there was not enough evidence to secure one. There is a serious danger here once the Minister gets rid of this system. The Duffy Walsh report recommends that these should be reviewed every five years, while the Bill provides that it be at least every five years. At any time when a proposal is made - possibly not the first one because politics will dictate otherwise - or when the review comes up from time to time, the Minister can simply say "no". He or she can say they do not think it is appropriate because the economy has changed. The Minister has carte blanche to say "yea" or "nay".

Formerly, JLCs were overseen by the Labour Court. To get departmental authority we had proposed the inclusion of the Minister, or the 2009 Bill proposed it, but under this Bill the Minister is effectively being given a veto instead of being included as somebody to sanction this if there is no obvious glaring error. That gives the Department and the Minister, if he or she is so minded, the power to wind down and get rid of the entire JLC system over whatever period suits him or her.

My other concern is the redress provisions. I accept that I put forward legislation in the House in which the redress provisions were nothing to write home about, but my understanding is that the law at present, under the Industrial Relations Act 1946, provides that if somebody is not being paid their proper wage or they do not have the proper conditions under the terms of an ERO, they can simply make a complaint to NERA. NERA has the right to prosecute the employer but in 99.9% of cases the threat of prosecution is enough to bring the employer to heel. The system is quite efficient. The only inefficiency is that there are not enough inspectors to get around quickly enough. They are only scratching the surface. However, that is provided for in sections 45 and 7 of the 1946 Act.

The Duffy Walsh report suggested an alternative. Incidentally, it did not suggest getting rid of the criminal sanction. An alternative means one has two choices and one can choose one or the other. The authors recommended that as an alternative to a criminal prosecution a complaint could be brought before the Labour Court and that NERA be authorised to bring such a complaint. In other words, one can automatically approach NERA and it will bring the complaint before the rights commissioner initially and then the Labour Court. The authors further recommend that NERA be authorised to serve a compliance notice on an employer when a contravention is detected.

What the Bill proposes, however, is entirely different. There is no automatic involvement of NERA. It will become involved if somebody is not bringing a case in a situation where NERA considers that it is unreasonable for them not to bring a case or make a complaint. NERA can decide to represent the person. However, to apply to a rights commissioner is not a very difficult procedure. If one goes to one's local Deputy, he or she will fill out the form to apply to the rights commissioner. I cannot imagine in what circumstances it will be reasonable for a person not to make the simple complaint to a rights commissioner.

There are two significant differences here, despite what the Minister said in his speech and what is said in the explanatory memorandum of the Bill. The criminal sanction is gone. The section that provided for it was deemed unconstitutional by the High Court. Second, resort to NERA is no longer automatic. I will outline what is very strange about this Bill. Under section 18 workers have the right to be informed about their rights. What sanction do they have if they are not informed about their rights? They can complain to NERA and the inspector can issue a directive. It is an extraordinary situation that a person has a quick and easy remedy involving NERA when they do not get information about their rights, but they must go around the world, wait months for the rights commissioner and, if one is outside Dublin, wait at least six months for the Labour Court and ultimately go to the Circuit Court when their pay is, perhaps, €5 per week less than it should be.

Why does a different procedure apply for people who are deprived of their rights as opposed to when people are deprived of information about their rights? The explanatory memorandum attempts to supply an answer. It states that the present arrangement for effecting compliance with the obligation to provide employees with a written statement of their terms of employment have proved unsatisfactory, as the only remedy for employees is to make a complaint to a rights commissioner and this can entail delays pending the outcome of a hearing. We are worried about the delays and hassle that will inevitably result from applying to a rights commissioner as regards not getting information about one's rights, but the Bill insists on it when one is trying to vindicate those rights. There is a glaring contradiction there.

My general point is that there are very significant differences between this Bill and what was proposed in the Duffy Walsh report. The Labour Party appears to have readily accepted what is being proposed, perhaps because its opposition to the Minister's proposals was a little synthetic in the first place or perhaps because its members have been hoodwinked about what is in the Bill. They should read it very carefully before signing off so readily on it. Certain trade unions fall into the same category. I recall a trade unionist referring to the debates on this Bill and he mentioned the other Opposition parties. He must have been out of work the day I put forward a Bill in the House and must have had something in his ears during the contributions I made. C'est la vie.

However, this Bill seriously diminishes the rights and protections of workers in the most vulnerable sector of the economy. Despite the Government's overwhelming majority, I will do my best to ensure it is radically amended on Committee Stage. I welcome the Minister's intention to bring forward amendments but the Bill will have to be amended considerably more than that. The real action will take place on Committee Stage but I cannot support the Bill unless it is radically amended as I have suggested.

See this speech in context