Tuesday, 29 March 2011
Employment Regulation Orders
Question 29: To ask the Minister for Enterprise; Trade and Innovation the position regarding the review of Employment Regulation Orders and Registered Employment Agreements as set out in the National Recovery Plan; when he intends to publish the review findings and if he plans to make provision in the legislative programme for any legislative changes that may occur [5972/11]
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.
I take the opportunity to wish the Minister and his team every success. As we reverse our roles for Question Time, we could have given that answer ourselves a few weeks ago so I take it no progress has been made in terms of publishing the report.
The Minister identified in his answer the difficulties these mechanisms are causing, particularly their inability to respond to changing market situations. This is one of the reasons we want to get the review up and running as quickly as possible. I am concerned that the programme for Government states, "We will reform the Joint Labour Committee structure, beginning with the appointment of independent chairpersons to JLCs, who will retain a casting vote." This seems to predetermine one of the report's major outcomes prior to it being published.
I will point the Minister to IBEC's ten-point plan. I know Fine Gael is obsessed with a five-point plan. IBEC's ten-point plan shows that one of the most objectionable aspects of the JLC, joint labour committee, system is the casting vote of a chairman. With regard to this review, has the Minister predetermined the outcome of any other issues, either on his part or by agreement with his partners in Government? Will the reforms the Minister proposes to implement be part of the so-called jobs budget due to be introduced within 100 days of the election?
I thank the Deputy for his good wishes and I pay tribute to his work while Minister of State with responsibility for labour affairs. He is correct to say that no progress has been made towards publication of the report but I remind him it was he who set the timeframe for the report to be presented and that date has not yet been reached. It is expected that this report will be on time and the recommendations will be available then.
Deputy Calleary is also correct in saying that the programme for Government includes having an independent chair and a casting vote. It is the view of Government that this system needs radical reform but not wholesale abandonment. We need to have a balanced and fair system for setting wages and one that is able to respond quickly to changed circumstances. Much of what is here is archaic in the way it was formulated. It is too cumbersome in the way it responds and it is too inflexible. We can achieve radical reforms without abandoning this system and this is my ambition.
On the question of the timescale, it would be the ambition to be in a position to substantially move or indicate the direction of legislation within the 100 days framework but getting legislation through the House would necessitate debate in committees. The Government will not guillotine legislation in a new reformed Dáil but it will be necessary to give time for the House to consider this issue.
There will be support from this party for reform of the system because it is archaic. The Minister referred to the pay rates being high. Is this an agreed position with his partners in Government? When does the Minister intend to sign the order to increase the minimum wage rate, as per the commitment in the programme for Government?
The issue of the minimum wage is under consideration and it is a commitment in the programme for Government. I believe that in order to be successful, these projects need to be kept in harness. As part of increasing the minimum wage a balanced package will require greater flexibility in setting wages and other terms and conditions related to it. I would regard these two processes of reforming the REA, registered employment agreements, and the JLC system and the increasing of the minimum wage rate, as being paired. The reduction in the minimum wage rate was part of the EU and IMF agreement and it will have to be discussed with the IMF and the EU with regard to its implementation. It is important, both from an Irish point of view and from the point of view of satisfying the EU and IMF, that the two issues are paired. It must be shown that we are introducing a balanced package to respond to the needs of the labour market.