Seanad debates

Thursday, 2 February 2012

5:00 pm

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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I welcome the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Perry, to the House.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I join the Cathaoirleach in welcoming the Minister of State, Deputy Perry, to the House. This motion has been prompted by the agency worker directive, which was adopted in 2008 and was to have been implemented by the end of December 2011. However, all Members recognise that the Irish economy is in a far different place now than it was in 2008. The Government has stated that jobs and economic recovery are the top priorities and all Members would subscribe to that. The Minister will recognise from his background in business that many organisations use agency workers to give them flexibility and competitiveness in the marketplace. It allows them to introduce different terms and conditions of employment and prevents a haemorrhaging of jobs from the economy to other jurisdictions with lower labour costs. I have been contacted by employees from many such organisations who are not agency workers. The workers within such companies, most of which involve foreign direct investment, work beside agency workers and have expressed concern that if agency workers are no longer available to the company, it may have implications for that company's policy on remaining in Ireland into the future. Consequently, this does not only pertain to agency workers. It also potentially affects permanent workers in such companies.

The purpose of my Adjournment matter is to ask whether an evaluation has been undertaken by the Minister and his Department on the impact of the Protection of Employees (Temporary Agency Work) Bill 2011 and whether an estimate has been made as to the number of jobs that are at risk and may be lost on foot of its introduction. Moreover, has an evaluation been undertaken to ensure the legislation does not go beyond the transposition of the EU directive in question? This is set against the background of Ireland's current serious economic and employment issues. When the present Government took office nearly 12 months ago, it stated that job creation was being prioritised. Several measures were taken, about which some reservations were expressed as to how successful they might be or the impact they might have. However, the statistics do not lie. Unemployment has increased in the interim, which means there must be greater emphasis and urgency on ensuring that we avoid introducing measures that could undermine this policy.

The Bill states "the basic working and employment conditions to which an agency worker is entitled shall be the same as the basic working and employment conditions to which ... a comparable worker is entitled". However, the directive's wording is much more restrictive. It states "the basic working and employment conditions of temporary agency workers shall be ... at least those that would apply if they had been recruited directly by that undertaking to occupy the same job" now. That is different because a person could be doing a job that may have commanded a higher rate of pay some years ago. Alternatively, someone else doing a similar job may have been recruited many years ago and may have seniority and skills. In general, the nature of temporary agency workers is that they arrive relatively unskilled and their skill base must be built up. However, the Government now proposes to ask companies to take on people and that they be paid the same from the outset.

This runs counter to the stated policy of the Government. It definitely runs counter to what the economy needs at present and is somewhat reminiscent of what amounted to a populist decision to go back on the decision to reduce the minimum wage. If our economy is not competitive and does not become competitive, we will have serious difficulty in generating growth, attracting foreign direct investment, new business or new industries, both domestic and international, to create and generate these jobs. The proposed measure could lead not only to this not happening but to a haemorrhaging of existing jobs. I am concerned and those to whom I have been speaking in this regard share my concerns. I ask the Minister of State to take on board this point and to bring it back to the Minister for Jobs, Enterprise and Innovation, whose very title incorporates the objective of generating and creating jobs.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I thank the Senator for his timely and pertinent comments and observations on the proposed Protection of Employees (Temporary Agency Work) Bill 2011, which is aimed at fulfilling Ireland's EU obligations to transpose the terms of the EU directive on temporary agency work. As such, the Bill represents the last piece of a three-part matrix of employment rights protection geared towards employees engaged in non-typical work patterns, such as in the case of part-time and fixed-term employees.

The Bill is designed to give effect to the EU directive on temporary agency work that was finally adopted in 2008 after several years of discussion. The directive has a transposition date of 5 December 2011. At its core, the directive aims to establish in all member states of the European Union a legal framework in which agency workers are afforded equal treatment in respect of their basic working and employment conditions as if they were directly recruited by a hirer to the same job. In Ireland's transposition legislation, equal treatment is being afforded to agency workers as if they were recruited directly by a hirer to occupy the same job, in respect of basic pay, and any pay in excess of basic pay in the case of shift work, piece work, overtime, unsocial hours worked and hours worked on a Sunday. This is an exhaustive list of those "pay" components that come within the scope of the equal treatment entitlement of agency workers under the transposition legislation and are entitlements directly linked to the work undertaken by the agency worker while on an assignment. This excludes other elements of remuneration that are provided in recognition of the long-term relationship between an employer and a permanent employee, such as bonuses, profit sharing schemes, occupational pension and sick pay schemes, as well as maternity top-up payments and similar benefits.

In short, the directive established a set of minimum rules to be applied by all EU member states having regard to national law, custom and practices in force in each jurisdiction. This is geared towards improving the operation of the temporary agency work sector by promoting job creation and by making agency work more attractive and more amenable to employers' need for flexibility in the labour market. The underlying rationale for the directive, as explained by the European Commission at the time the proposal was first tabled in 2002, was that by extending the equal treatment provision to agency workers at the EU level and by creating a common framework for agency working, this would promote agency work. In the context of its analysis at the time, the Commission pointed to the main difference in terms of intrinsic quality of agency working compared with the terms and conditions enjoyed by employees on open-ended contracts as being related to pay.

The Bill, to give effect to the terms of the EU directive in Ireland, aims to strike the right balance between further protections and a fairer treatment of agency workers while respecting the flexibility for which this work form is known to provide to employers and hirers of agency workers in meeting business needs. In giving effect to the directive, the proposed Bill aims to respect the objective of ensuring fair treatment for agency workers while at the same time striking a balance with the need to ensure the necessary level of labour market flexibility that the employment of agency workers affords for workers and employers alike.

Agency work has a legitimate and valuable role to play in the economy and is the option of choice of some people who benefit from the flexibility, personal freedom and income it provides. It can often keep people in the labour market at times in their careers or lives when they might otherwise be unemployed. It serves the business needs of employers in that this type of atypical working can be used as a complementary workforce to assist in managing the peaks and troughs encountered in the normal business cycle.

In the preparation of the current legislation, my Department conducted a public consultation and obtained the views and observations of a range of key stakeholders, including employers, unions, the recruitment sector and other interested parties, including hirers of agency workers. The outcome of the consultation helped inform core elements of the published Bill. Simultaneously, a regulatory impact analysis was undertaken. This provided an overview by way of qualitative analysis of the potential impact on industry costs and on employment of transposition of the directive into Irish law.

The background to this approach is that it is very difficult to obtain an accurate profile of the agency work sector in Ireland as established statistical sources do not capture this type of atypical work. In general, estimates based on surveys conducted by private employment agencies suggest temporary agency workers represent approximately 2% of the total working population, which amounts to 35,000 agency workers operating in the private and public sector. The majority of agency workers are engaged in the private sector across a diversity of sectors ranging from security, manufacturing, services and ICT. In the public sector, agency working features predominantly in the health sector which employs significant levels of workers on an ongoing basis, a fact that is now more pronounced with the public sector recruitment moratorium. A key message from the impact analysis is that implementation of the directive brings agency workers and directly recruited staff closer together in terms of equal treatment in basic working and employment conditions. It has the potential, therefore, to increase the cost of employment in terms of payroll, holidays and the extension of amenities such as crèches and canteens.

It has been represented that the directive could have an adverse effect on employment, especially in the absence of any derogation facility under Article 5.4, in that for short-term assignments, employers simply will not take on short-term temporary agency workers and instead provide cover with existing employees through overtime or otherwise, with potential for making the black economy attractive. Furthermore, the case has been articulated that job losses could arise from the loss of future investment projects in Ireland due to a perception of the loss of labour market flexibility if a derogation facility under Article 5.4 is not available.

The Department of Health points also to increased costs in terms of Exchequer funding for the employment of agency staff in the health sector following transposition. This will arise as a result of changes that were made to the contracts of agency staff last year which placed agency staff on one of two points of a pay scale that will have to be rolled back given the requirement for equal treatment with direct employees after the directive is transposed. Furthermore, agency staff currently afforded only statutory annual leave will, after 5 December, be entitled to parity with direct employees which will have an incremental cost to the Exchequer in terms of employing agency staff.

The Bill, which was published in December, has the balanced approach required to meet the full and proper transposition of the EU directive. The Government will continue to ensure the necessary balanced approach is achieved in the proposed legislation as it proceeds through the Houses. In the current challenging economic times, growth and employment are necessary prerequisites of a well-functioning economy that can retain and grow employment.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I thank the Minister of State for his response and I note the qualitative analysis recognised the directive could have an adverse effect on employment, particularly in the absence of a derogation facility. Am I right to assume we do not have a derogation facility and therefore this will have an adverse effect on unemployment? Loss of employment could arise from the loss of future investment projects. I was told by someone in the industry it will have implications for that person's business. A decision would be taken outside of here, but that business could end up moving to India or another lower labour cost country.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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Yes.

Photo of Jim WalshJim Walsh (Fianna Fail)
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The analysis seems to confirm these fears. Why are we going beyond the intent of the directive which limits it to taking on someone today at a lower rate than he or she would have been paid five years ago? The Bill will mean such an employee must be paid the same as someone who was employed five years ago.

Photo of Michael MullinsMichael Mullins (Fine Gael)
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The Senator has made his point.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I thank the Acting Chairman for his indulgence. This is an important point. We speak about job creation and reducing VAT, but if we lose a significant number of jobs as a consequence of changing legislation, it means we must be cautious.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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The Senator suggests the Bill as crafted will have a negative impact on employment.

Photo of Jim WalshJim Walsh (Fianna Fail)
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Yes.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I thank Senator Walsh for his comments because he has come to the nub of the question. The Bill will fulfil Ireland's responsibility to meet the terms of the directive and ensure its correct transposition into Irish law.

Photo of Jim WalshJim Walsh (Fianna Fail)
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Will we restrict it to this? We are going beyond-----

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I was Chairman of the Oireachtas committee that scrutinised EU legislation for two and a half years and it is about not gold-plating directives when transposing them. The Government does not intend to gold-plate any EU directive, and this is the mindset of the Minister, Deputy Bruton.

In the lead-up to the preparation of the Bill and following the consultation phase with key stakeholders, including union and employer representatives and other interested parties, the Minister impressed on all sides the need for a balanced approach which is all about practicality. As the Senator stated in his initial comments, there is a fine line. Implementation of the legislation should help sustain existing jobs and grow employment in the sector.

I am not speaking about job retention and growth at any cost. The transposition of the directive will provide agency workers with new protections and fair and decent conditions, and this is important. It is important that agency work continues to be an attractive prospect for workers who wish to pursue this option as a matter of choice and to help meet the flexible working patterns of firms, including small and medium enterprises, to meet business needs.

The Bill as drafted, with new protections afforded to agency workers through the application of equal treatment in respect of basic working and employment conditions, meets the needs of agency workers and employers alike. It will certainly help the sector to continue to provide job opportunities to meet employers' requirements to deliver services. The overall approach of the EU directive aims to protect temporary agency workers and improve the quality of agency work by ensuring agency workers benefit from equal treatment. A purpose of the directive is to recognise employment agencies as employers with a view to contributing to the retention and creation of jobs and the development of flexible terms. The Bill meets this objective and will provide in its implementation a positive platform for the future development of the agency sector for agency workers, employment agencies and hirers. It will also support job maintenance and retention in the sector.