Peter Fitzpatrick (Louth, Fine Gael)

The Industrial Relations (No. 3) Bill 2011 has been introduced to fully reform and modernise the JLC system. By achieving this, it will fully reflect the challenges of a modem economy and also ensure the system is constitutionally robust. These are notable and commendable aspirations.

The Bill, when enacted, will implement the programme of reform to the statutory wage setting mechanisms agreed by Government in July 2011. It will radically overhaul the system so as to make it fairer and more responsive to changing economic circumstances and labour market conditions. It is this ability to respond in an effective manner to such conditions that gives the Bill great credibility.

It should not be forgotten that the introduction of the legislation to reform the JLC-REA system is a commitment in the programme for Government. In addition, there was a commitment under the most recent EU-IMF memorandum of understanding to legislation before the Dáil to modernise registered employment agreements and employment regulation orders with a view to reducing the possible negative impact on job creation and competitiveness of existing arrangements. The fact that these commitments are being met with this Bill is further evidence of this Government's fervent desire to live up to all its commitments.

In July 2011 the Government agreed a package of radical reform of the joint labour committee and REA wage settling mechanisms. The reform proposals included the recommendations in the Duffy-Walsh report. In addition the Minister has proposed several non-legislative flanking measures, which include the following reforms: taking steps to reduce the number of JLCs currently in place from 13 to six; standardising benefits in the nature of pay, including overtime and the conditions under which it becomes payable across sectors covered by JLCs; and preparing a new statutory code of practice on Sunday working to provide guidance to employers, employees and their representatives in sectors covered by the EROs.

The reforms in the statutory wage setting machinery operating at sector level, in conjunction with putting the JLC and REA systems on a more secure legal and constitutional footing, represent a significant commitment by this Government to protect the lowest paid and most vulnerable workers. These workers by necessity spend a higher proportion of their income on consumption and, consequently, cutting their wages will significantly reduce spending in the economy at a time when the savings rate is already high and domestic demand has collapsed. Any amendment to wage-setting mechanisms should ensure that the incomes of vulnerable low earners are fully protected and that demand in the economy is not further impaired. This is what this Bill achieves.

In taking account of the Duffy Walsh report, the Bill is a solid start in making the system fairer and more responsive to changing economic circumstances and labour market conditions. The overriding objective is to create a framework within which greater efficiencies and necessary adjustments in payroll costs can be achieved in the affected sectors. That has to be welcomed by all stake holders. This Bill has correctly acknowledged the recommendations of the Duffy Walsh report and has gone some way towards implementing them. The report called for a radical overhaul of the system and that is what this legislation does. I have no hesitation in commending the Bill to the house.

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