Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context

Question 1: To ask the Minister for Jobs; Enterprise and Innovation if he had discussions on the Duffy/Walsh report on reforming the wage setting mechanism; if he has agreed a common approach; when he intends to introduce and implement legislation; and if he will make a statement on the matter. [14986/11]

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context

Question 5: To ask the Minister for Jobs; Enterprise and Innovation the number of families and persons his proposals for the reform of the joint labour commissions and registered employment agreements will push into poverty as defined in the National Action Plan for Social Inclusion 2007 – 2016; the number of new jobs that will be created; if these new jobs will be outside or inside the definition of poverty as defined; and the savings, if any, that will accrue to the State. [14998/11]

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

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.

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context

I thank the Minister for his comprehensive reply. Despite all the information he gave, he omitted one small item of information in which I am particularly interested, namely, when the legislation will be introduced into the House for implementation. The Minister is constantly making the point that this is vital to stem the haemorrhage of job losses in the sectors covered by joint labour committees, JLCs. If this is the case then why the lack of urgency with the legislation? Apparently, the Minister cannot inform us when approximately the legislation will appear.

It is part of the Minister's proposals that the scope of employment regulation orders should be limited to regulating pay and conditions for those on adult basic rates. Does he realise this will leave the rates for more experienced or skilled employees to be agreed between employers and employees at firm level? Does the Minister not agree that this will put an irresistibly downward pressure on wage rates in this sector?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

The legislation will be introduced at the earliest stage. First, we must get a decision of Government and we hope to go to Government on 21 June. As the Deputy is aware, we have the shell of legislation prepared by the Deputy's Government previously. Part of the legislation is drafted. We hope this will help us to minimise the delay and the Parliamentary Counsel's time and that we can move swiftly to implement it. Several factors are at play and I cannot give precise predictions on the timing but it is my determination to do this as rapidly as possible.

The review recommends that consideration should be given to confining the JLC rates to the basic adult rate. One of the recommendations put forward by our proposals is to implement what the review has raised as an issue for consideration. The reason for it is that in some sectors there are 25 different rates which must be recorded and accounted for separately. The review raised the point that this is too cumbersome and ought to be reformed. This is why the proposal is on the agenda and part of the ongoing discussions.

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context

In an earlier debate the Minister, Deputy Noonan, stated in jovial form that one of his colleagues had to bring his payslip with him to the local bar in his pocket to prove to the people in the pub that he was struggling himself. I realise the statement was made in humour but it is important to note that the average Deputy's wage at the moment is nine times the average JLC wage. Roughly 300,000 people work under JLC agreements and they receive on average €18,000 per year in pay. That is a low wage. It is half the average industrial wage, nine times less than the average Deputy's wage and approximately 12 times less than the average Minister's wage at the moment.

Michael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

Can we have a question Deputy?

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context

There is a question. Several individuals will be pushed into poverty. Standards and criteria exist under which one judges what constitutes poverty. The question asked how many people will be pushed into poverty on this issue. I have not heard the answer to the question and I call on the Minister to address it.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

There is no proposal to cut any specific rate of pay. As the Deputy is aware, the Duffy report did not recommend reducing JLC rates to the national minimum wage although it was one of the issues considered, nor has this been included in the proposals. All the assessments of the impact of poverty indicate that the greatest source of poverty is the loss of a job. Persons who are unemployed are at risk of being in serious poverty at a level ten times greater than a person in employment by all tests. The motivation is to reduce the number of people who are becoming unemployed and to increase the number going back to work. All the poverty analysis indicates that this is the best way.

These sectors have been subject to a great degree of attrition in employment. They are also sectors in which we hope to build opportunities under the Government's initiatives for tourism. However, the businesses must be capable of responding to the opportunity. This is why we believe and the authors of the report believe that we must reform the system so that those employment opportunities can be seized.

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context

In reply to Deputy Tóibín, the Minister stated that the purpose of his reforms were twofold: to enable employers to create more jobs in these particular sectors and to prevent further job losses. The Minister stated in the public domain last weekend that this would apply only to new people, not to existing workers and that existing workers were already protected by contractual rights, legislation and the devil knows what else. If there is to be no change to those currently employed under JLC arrangements how will this assist in preventing job losses in these sectors? There will be no change. How will the reforms prevent further job losses?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

For example, if we change the rule whereby a bar that offers food need not apply a premium, it could represent an opportunity for a business to protect part of its trade. If an employer can generate more business through the flexibility this generates, he or she can respond and protect employment. Many businesses are under severe pressure in these sectors. Let us not forget that we apply the rules in 25% of the retail sector. These arrangements are applied in some sectors but not in vast swathes.

The issue of Sunday working has been raised as controversial. There is protection in the organisation of working time legislation for people in respect of Sunday working. One need not be part of a JLC arrangement to have protection under the law. This flexibility allow employers to have a better cost base and to seize opportunities. Clearly, this protects employment.

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context

The flexibility will not apply to existing employees.

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context

To implement something such as this there must be two criteria: it must create jobs and it must not push people into poverty. There are some 100,000 working poor in the State. Having a job in itself provides no insulation against poverty. Models exist within the Department of Finance into which Ministers, such as Deputy Bruton, can input figures which give readings of what job creation is to be expected. If the Minister intends to proceed with the policy outlined, how many jobs will be created? How many people will be pushed into poverty? The systems are in place for the Minister to analyse that much.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

The view is linked to the impact on reducing the average wages of people already in work. I admit that although they are protected by existing contracts there may be reductions over time. That is significantly outweighed by the employment opportunity created by getting people back to work. I quoted the figure that a person is ten times more likely to be in poverty if he or she is out of work rather than working. That is a significant benefit.

We do not have a model to predict accurately the impact of the changes. The changes cannot be computed by models which simply bring a rate down or up such as the minimum wage rate. Those changes have been analysed by these models but that is not what is being proposed. It is proposed to make some changes in respect of Sunday premiums, to standardise these over time, to look at excessive compliance costs in place and to create a more flexible model to respond to opportunities. There is no detailed model in my Department or any other Department that can predict the impact of these.