Dáil debates

Thursday, 9 June 2011

5:00 pm

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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Question 9: To ask the Minister for Jobs; Enterprise and Innovation if he consulted with the Department of An Taoiseach on his proposals on wage reform before they were presented to the social partners. [14526/11]

Photo of Barry CowenBarry Cowen (Laois-Offaly, Fianna Fail)
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Question 15: To ask the Minister for Jobs; Enterprise and Innovation if he accepts the key findings of the Duffy/Walsh report. [14630/11]

Photo of Sandra McLellanSandra McLellan (Cork East, Sinn Fein)
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Question 16: To ask the Minister for Jobs; Enterprise and Innovation if his discussions with the social partners on the joint labour committee and registered employment agreements reform will include consideration of the Walsh Duffy report. [14714/11]

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Question 17: To ask the Minister for Jobs; Enterprise and Innovation in view of the current review of the joint labour committee and registered employment agreements, his views on the statement by the Employment Research Centre in Trinity College Dublin that the JLC system has kept more workers employed because they effectively outlaw zero hour contracts; if he will give a commitment not to reduce the time and a third payments for anti social hours; if he will ensure that an inability to pay clause will not be abused by employers; and if he will make a statement on the matter. [14730/11]

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Question 18: To ask the Minister for Jobs; Enterprise and Innovation the estimated fall in spending power due to the reduced demand as a result of the proposed reduction in the pay rates of the joint labour committee. [14711/11]

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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Question 23: To ask the Minister for Jobs; Enterprise and Innovation the status of the review of the statutory wage-setting mechanism such as registered employment agreements and employment regulation orders. [11383/11]

Photo of Sandra McLellanSandra McLellan (Cork East, Sinn Fein)
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Question 24: To ask the Minister for Jobs; Enterprise and Innovation if his proposals for reform of the joint labour committees and registered employment agreements were subject to an equality impact assessment before being released to the social partners. [14715/11]

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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Question 31: To ask the Minister for Jobs; Enterprise and Innovation the estimated increase or decrease in the numbers of jobs within the economy as a result of the proposed reduction in the pay rates of the joint labour committee. [14713/11]

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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Question 34: To ask the Minister for Jobs; Enterprise and Innovation his understanding of France's position on Ireland's corporation tax. [14629/11]

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Question 35: To ask the Minister for Jobs; Enterprise and Innovation the cost to the State in terms of the reduction of taxation received and the increase of outgoing welfare payments as a result of the proposed reduction in the pay rates of the joint labour committee. [14710/11]

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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Question 40: To ask the Minister for Jobs; Enterprise and Innovation if any final proposals for joint labour commission and registered employment agreements reform require the approval of the EU, ECB and or IMF before being enacted. [14717/11]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I propose to take Questions Nos. 9, 15 to 18, inclusive, 23, 24, 31, 34, 35 and 40 together.

I have already dealt comprehensively with the issues raised in this series of questions in my earlier reply to the Priority Questions on the issue of the review of employment regulations orders and registered employment agreement wage setting mechanisms. However, I would like to reiterate the main issues. 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. Together with the decision to restore the national minimum wage to €8.65 per hour, the decision to reform the joint labour committee structure represents a significant commitment by the Government to the lowest paid and most vulnerable workers in the economy. However, 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.

Radical reform is required in order to protect existing jobs in these vulnerable sectors of the economy and to increase the likelihood of employment in these sectors and to restore competitiveness in key sectors of the economy, including the hospitality sector which is crucial to our tourism offering. I am anxious to pursue the agenda for radical overhaul of the ERO-REA system as a matter of urgency, including proposals dealt with in the report and other issues raised by the report. In this context, it is my intention to complete discussion with relevant stakeholders in the coming days with a view to submitting a final action plan for consideration by Government before the end of the month.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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I thank the Minister for the extra information. My question asked whether he consulted with the Department of the Taoiseach on his proposals before he presented them to the social partners. I would like an answer to that. There is no reference in the Minister's proposals to a number of the more minor recommendations of the Duffy-Walsh committee, namely recommendation No. 5 in regard to the reform and modernisation of the contract cleaning business, recommendation No. 15 on the electrical contracting REA and recommendation No. 19 to compliance away from the criminal domain and make it a civil matter as an alternative to the current situation. Is the Minister committed to those proposals?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I held consultations and all Ministers were aware that I would be introducing a wider range of recommendations to my discussions with the social partners. No one Minister was involved. In our discussions with the social partners we focused on key recommendations. The recommendations to which the Deputy referred have not been excluded and are receiving due consideration. Many of them are simply improvements in the effectiveness of operation. They were not included because they did not represent contentious issues. All of the recommendations will be given due consideration before the final paper is brought to Government for a decision.

6:00 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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In regard to the Minister's previous answers on the same issue, I ask him to justify what I believe is a completely false connection that he is making between job losses in the construction and retail sectors and those sectors which coincide with the JLCs and REAs. He seems to suggest that there is some connection between the two and that it justifies a review of the JLCs and REAs which will produce more jobs.

I put it to the Minister that there is no connection between job losses and the operation of joint labour committees and employment regulation orders in construction, retail and other sectors. Jobs have been lost as a result of the greed of bankers and developers and the failure of Governments to control it. These factors crashed the relevant economic sectors and crashed demand in the economy. That is the reason companies are going out of business. It is false to suggest the problem is one of competitiveness or that wages must be levelled downwards by attacking pay and conditions via the JLCs and EROs. The Minister is wrong to suggest that eliminating premium payments will create more jobs. I ask him to respond to the argument that if one makes a bad situation worse if one takes money out of the pockets of low paid workers because it reduces demand and spending in precisely the businesses and shops he has in mind.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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The Deputy asked a large number of questions.

I have not made a false connection. The review group recommended that the joint labour committee and employment regulation order system be radically reformed to restore competitiveness. Its report sets out inflexibilities in the system which make it difficult to respond to the changed economic circumstances. I am not making anything up. We have lost substantial numbers of jobs. Job creation is the priority for the Government but there will be no return to building more and more houses in the construction sector. We must create jobs in tourism and other export sectors in which we can build sustainable markets.

The report recommends that we must change the current system to enable employers, many of whom are hanging on by their fingernails, to avail of growing opportunities in sectors such as tourism. We must recognise that every business in the leisure and tourism sector is being compelled to change its offering by taking initiatives such as cutting rates, offering early bird deals and trying to reopen on Sundays to serve tourists who expect a seven day service. Many opportunities are developing and the report has told us that the structure we have imposed on certain segments of the retail and catering sectors is inflexible and will prevent such opportunities from being exploited. We are seeking to reform the system because jobs are our top priority. We must make choices and maximise opportunities.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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If jobs were the top priority, there would be empirical evidence to show the Minister's proposal would create jobs. The report states there is no empirical evidence to show there will be a net increase in jobs as a result of some of the Government's proposals. On the other hand, the Minister has admitted the policies the Government will implement will result in a reduction in wages. What we will have, therefore, is a policy defined on a hunch rather than empirical evidence, which will definitely reduce wages while failing to create jobs. Have other issues such as the Croke Park agreement been put on the table to placate Labour Party Deputies with regard to negotiations with the social partners on the joint labour committees?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I ask Deputy Tóibín to read the report. It did not produce any empirical evidence to suggest some of the proposals we are taking-----

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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It stated there is no proof the proposals would create jobs.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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It made one statement about employment, namely, that reducing the JLC rates to the national minimum wage rates would not have a substantial impact on employment. The Government has not made any proposal to reduce the JLC rates to the national minimum wage. The report used analysis that examines minimum wage systems across a range of countries in normal circumstances. It did not consider specific reforms in an inflexible system which are targeted at trying to make it easier to create employment in an economy that has suffered a collapse in employment and to avail of opportunities, wherever they can be found, to create jobs. That is the context. Time and again, the report states we must address the way in which the current arrangements are undermining competitiveness in the economy. This is not some sort of conspiracy but a question of how we can make certain sectors sufficiently flexible to respond to opportunities.

The Government is not abandoning the joint labour committee system, as many people have advocated. On the contrary, we recognise that it provides important protection to workers but this protection must be balanced with the need to create employment opportunities.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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Does the Minister agree that the issue is one of income and demand rather than the wage levels in sectors governed by joint labour committees and employment regulation orders? There is no demand for restaurant and hotel services because people do not have money. For this reason, reducing overtime and Sunday rates, as has been proposed, will not have an impact on the hospitality industry. Does the Minister agree that people working in the sectors covered by the JLCs and EROs need their current income if they are to sustain their current living standards and feed their children?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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While I recognise that there has been collapse in demand in the economy, the volume of demand is not invariable but changes as businesses adapt to different circumstances. For example, some businesses will open on Sundays to win more opportunities to trade and create employment. They will adapt to respond to opportunities in the tourism sector. The Government has set a target of attracting an additional 1 million tourists and has abolished the travel tax, cut the VAT rate and reduced the lower rate of employer PRSI. In doing so, it will make the relevant sectors more competitive and create opportunities for further employment.

We are told by an expert group that the JLC and ERO agreements are creating an inflexibility that is undermining competitiveness and our ability to respond to opportunities. We are seeking to reform these agreements to ensure the relevant sectors can respond to opportunities. While I do not pretend there is not a problem with demand, we must try to create employment within a demand constrained economy. This requires flexibility and competitiveness to win new markets and attract tourists.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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The Minister stated it is not part of the Government's proposal to reduce pay rates in the relevant sectors. Does he not accept that if his proposals are accepted, wage reductions will be inevitable across these sectors? I have read the Duffy-Walsh report in detail and it clearly concludes there is only a marginal difference in wage rates between those employed in the JLC sector and comparable employments. For example, the chapter dealing with nominal wage rigidity and so forth does not suggest there is anything exceptional about the JLC sector that is giving rise to job losses or preventing employers from taking on more staff. This section of the report is detailed. Does the Minister hold to his statement at the weekend that current employees will not be affected by the proposals, which will affect only those who are recruited after they become law?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Existing employees are protected by their existing contracts of employment which would have to be renegotiated if there were to be any change. The changes would provide that a different regime could apply to new recruits. This offers flexibility. The report does not recommend - nor does the Government advocate - cutting JLC rates across the board or reducing them from their current levels to €8.65, the level to which the minimum wage is to be restored. That is the context within which they examined the impact, but that is not what is being proposed. They found that people working in JLC sectors, even with the same mix of education and experience, are not earning much more than in other sectors. Equally, however, they found that the systems in these sectors are hampering the ability to compete in areas where we need to create employment. We did not need a report like this to tell us that temporary retail workers, such as younger people and students who may have high qualifications, are not highly paid compared to where many of them may end up later. That finding is valid, but it does not invalidate the finding that these systems are undermining competitiveness and need to be reformed.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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With regard to the current negotiations with the social partners, is the Minister's previous strongly held antipathy to the Croke Park agreement - as well as other issues affecting wages rates, pay and working conditions - on the negotiating table with regard to the JLCs?

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Where is the evidence that lowering the income of the lowest paid workers - even by a marginal degree in terms of Sunday and other premium payments - will create extra jobs? There is no evidence to back it up. The Minister is cutting off his nose to spite his face because he will further constrict demand in the economy. There is an alternative proposal, however. Instead of trying to create jobs by taking from the earnings of the lowest paid, why not do something about differential rates? In that case, struggling small businesses would pay lower rates, which would be compensated for by the bigger and more profitable business chains paying higher rates. Would that not do a hell of a lot more to stimulate job creation, rather than taking earnings from low-paid workers who spend their money in those same shops and businesses?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I absolutely agree that we need to reform many areas in order to create employment. The Government is committed to reforming the legal system and introducing legislation on upward-only rent reviews. We have already cut employers' PRSI and VAT. In addition, we are committed to many other reforms that will facilitate employers to create jobs. We need to examine rates and the previous Government's study indicated that costs can be taken out of the local authority system, which can be used to bring down rates. We have to become more competitive as a community. However, the Deputy seems to overlook the fact that experts in this field, such as Mr. Kevin Duffy and Professor Frank Walsh, have reviewed this system and found it is undermining our competitiveness in these areas. There is evidence that if one can reduce labour costs and be more flexible in responding to opportunity, one can create employment. They have singled out areas where there are difficulties in this system, including where compliance is too high and they are too inflexible to changing circumstances, or are based on an antiquated view of the working week. They have identified many areas where this system is not serving the need to create employment. That is what we have set as our priority and there is ample evidence in that regard.

This has got nothing to do with the Croke Park agreement, so I do not know where that question came from. The Government is examining the delivery of the Croke Park agreement and there will be a report on that matter from the Minister for Public Expenditure and Reform. Under the IMF-EU memorandum of understanding there is action which the Government needs to take to deliver certain cost commitments. They are part of the Croke Park agreement and the Minister will be returning to Government to say how much has been achieved in that area. That is clear.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Were they were part of the negotiations, though?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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No. I have not mentioned the words "Croke Park agreement" in that context.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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The previous Government committed in 2008 to reducing administrative burdens by 25% by 2012. The work to reduce administrative burdens on business in Ireland is being progressed on two fronts. The High Level Group on Business Regulation works to fast-track simplifications to specific red-tape issues identified by business. In addition, an interdepartmental group of officials from all Departments, having regulation affecting business, co-ordinates the measurement and reduction of administrative burdens in a systematic manner, based on the internationally recognised standard cost model.

The high level group is chaired by my colleague the Minister of State for Small Business, Deputy John Perry. To date, the group has processed 48 specific red-tape issues brought to its attention by business, and continues to drive progress on a further 20 items.

The group continues to work with business interests to identify new opportunities for simplification. In addition, my Department is in the process of measuring other burden reductions achieved across Government. The results of this measurement exercise are expected to be available in the second half of 2011.

As far as quantification of the savings concerned, the CSO and my Department have done exercises to quantify the main burdens. My Department has already reduced measured burdens by 22%, or 90% of the target to be achieved, which is an annual saving of almost €187 million. I expect that I will be in a position to announce the initiatives that will make up the remaining 3% before the end of the year.

To give greater momentum to this process and to reiterate the importance of continuing action in this task to other Departments, I intend to initiate a project shortly to measure the burdens across all remaining Departments. This is expected to be completed in the first quarter of 2012. Each relevant Department will then prepare simplification plans detailing how they will meet any shortfall from the 25% target within their areas of responsibility.

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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The Minister indicated in his reply that 2012 is the target, although it was supposed to be 31 December 2011. Will the Minister indicate whether that target date will be met? If not, when does he expect the 25% reduction to be finally achieved? Has his Department any estimate as to the actual savings to small business when that reduction is achieved?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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When I assumed office, I was surprised to find how few hard facts had been assembled by the previous Government concerning a programme that was well under way and had started in 2008. I recognise, however, that there has been progress. The Revenue on-line system has been significant, but there is not the basic measurement matrix across each Department that would allow me to answer that question. That is why I have moved to bring momentum to this, get a proper measurement and start to obtain a baseline as to how much has been achieved. Many Departments have achieved a lot, but others have scope to do an awful lot more. I am therefore trying to pick up the pieces and give more momentum to this process.

I am quoting figures from the previous Government. The overall figure is €500 million, which it is believed could be achieved. We have delivered €187 million in areas that bear directly on enterprise from my Department. We need to quantify how much has been achieved and what remains to be done. I want to give momentum to delivering on the target.