Vol. 670 No. 2
69 Deputy Catherine Byrne asked the Tánaiste and Minister for Enterprise, Trade and Employment if her Department has received an application from Aer Lingus for a rebate on some of the statutory elements of the redundancy package offered to its staff; and if she will make a statement on the matter. [44966/08]
Aer Lingus has, in line with standard procedure under the Protection of Employment Act 1977, written to my Department with notification of its intentions with regard to collective redundancies in the company. My Department is examining the correspondence and it will be dealt with in the normal way if and when a redundancy situationarises.
Should the company proceed to file claims for redundancy payment, the applications will be examined to see if they meet the eligibility criteria set down in the Redundancy Payments Acts. The Department does not comment publicly on any particular company's applications.
I thank the Tánaiste for the answer. It is fair to say a decision has yet to be made on that matter. It was important to have a deal at Aer Lingus. Unions and employers have come together to make an agreement that I hope will save the airline and allow it to continue as an independent airline. I have a concern that the taxpayer might effectively subsidise bogus redundancy arrangements whereby someone resigns from a job, receives a redundancy payment for having done so and reapplies for the same or a similar job in the same organisation with different terms and conditions. The taxpayer is then hit for that. We talk about the race to the bottom in Ireland. Should unions and employers wish to negotiate a reduction in pay and conditions it is a matter for them. I would not like to see the taxpayer subsidising such an arrangement. Given the Tánaiste's answer, I have a concern that Aer Lingus employees would believe that, based on the assurances given by Aer Lingus and the unions, they will not be taxed on these redundancy payments. From the Tánaiste's answer, that seems uncertain in some cases at least.
There is no uncertainty on the basis that the application is not with me at this moment. There are set procedures under the Redundancy Payment Act and, to ensure we have final determination arising from the issues raised by Deputy Varadkar, where there are concerns on adjudication the Employment Appeals Tribunal is used for decision making. There has been no decision and I cannot give a preliminary decision on the basis that there is no application. I reiterate the view of Deputy Varadkar that, arising from the decisions made by the company and the unions, clarity will be provided as quickly as possible.
Did the Department give prior assurances?
We can only give a preliminary view but it is based on an individual application. Each person can have an issue raised but in ensuring that there is absolute clarity we would be taking the matter to the Employment Appeals Tribunal.
I thought the Minister would say that because it is prescribed by a statutory procedure.
Is the Tánaiste concerned that it has taken 16 weeks or more to deal with applications for statutory redundancy? My view is that it is longer than 16 weeks. Despite the good practice objective within the Department to have it dealt with quicker than that, it is taking at least 16 weeks, notwithstanding the reply of the Minister of State, Deputy Billy Kelleher. He disputed my contention but stated he was disappointed it was taking 16 weeks.
I acted upon Deputy Penrose's promptings.
It is of concern and Members are aware of the situation on the ground. Can additional staff at the Department be deployed to expedite this matter, as was done at the Department of Social and Family Affairs?
That is broadening the question.
Given the Deputy's views, the Minister of State is concerned that the period is outside our customer charter and, on that basis, we are redeploying staff within the complement to facilitate the major workload of our staff.
Would the Tánaiste see the proposed agreement between trade unions and management at Aer Lingus as an advancement of industrial relations? Does she consider it a positive example for employers where, if they engage and negotiate positively and constructively, there is a way forward? It is not that I would prefer this deal but does the Minister regard this as a positive move?
Again, this broadens the question.
It is ingenuity.
It is ingenuity or innovation. There are statutory requirements that must be addressed. That is to secure the entitlements of an employee. The matter of workers' rights and statutory supports was raised a few minutes ago. Equated to this is a balance given the difficulties we are working within. The role of social partners in the context of economic recovery and difficulty is of major importance. Working with social partners will benefit the outcome of the economy and, most particularly, some trying issues that face us all.
70 Deputy Joe Costello asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of inspections carried out by the labour inspectorate to ensure that the minimum wage was being paid in 2006, 2007 and to date in 2008; the number of breaches detected; the number of prosecutions initiated; and if she will make a statement on the matter. [44914/08]
93 Deputy Eamon Gilmore asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of workplace inspections carried out by the labour inspectorate to date in 2008; the way this compares with the same period in 2007; and if she will make a statement on the matter. [44913/08]
I propose to take Questions Nos. 70 and 93 together.
The number of employment rights inspections, visits or calls undertaken by the inspection services of the National Employment Rights Authority in the year to the end of November 2008 was 26,787. During the same period in 2007 some 12,369 inspections, visits or calls were undertaken. Of the 26,787 inspections, visits or calls to the end of November 2008, breaches were detected in 4,407 cases. In the same period in 2007 breaches were detected in 2,290 cases. To the end of November 2008, €2.34 million in underpayment of wages due to employees has been recovered by the NERA inspection services compared to €2.48 million for the corresponding period in 2007.
The outputs and outcomes to date in 2008 reflect the focused and targeted activities being undertaken by NERA in respect of employment rights promotion and compliance and the increased number of NERA inspectors. The number of inspections carried out in respect of the National Minimum Wage Act 2000 during which breaches of the Act were detected and the number of prosecutions initiated is as follows. In 2006, 2,002 inspections were undertaken; in 104 cases breaches were detected and in one case a prosecution was initiated. In 2007, 1,942 inspections were undertaken; in 192 cases breaches were detected and no prosecutions were initiated. In 2008, 2,979 inspections have been undertaken to 30 November; in 258 cases breaches have been detected and in two cases prosecutions have been initiated. In one case, at the commencement of the trial, the parties entered into a compromise agreement and the prosecution was withdrawn on the direction of the District Court judge.
NERA undertook a targeted campaign, which focused on compliance with the National Minimum Wage Act 2000 between 14 April and 11 May 2008. Such campaigns, accompanied by awareness and promotional activities, are a significant feature of NERA's employment rights compliance and information strategy. The primary role of the authority in the case of breaches of employment rights legislation is to seek compliance and rectification of any breaches identified, including redress for the employees concerned and payment of any arrears due to those employees. Employers rectify breaches of employment law and pay under payments of wages due to employees without prosecution in the majority of cases. However, the authority reserves the right to initiate prosecutions in respect of breaches of employment legislation. Rights commissioners of the Labour Relations Commission also hear complaints concerning breaches of the National Minimum Wage Act 2000.
I accept that and I understand why there are not many prosecutions. Once the initial breach is detected, negotiations are entered into and matters are resolved. Is the Minister of State concerned there will be more pressure on wage structures in 2009 because of the economic downturn? Is there a forum for discussion under Towards 2016 between the social partners to ensure the minimum wage will at least be paid? Are discussions taking place regarding another matter relating to the hotel industry, which we brought to the Minister of State's attention? Will he update the House about this matter, to which he obliquely referred earlier?
A procedure is in place for striking the minimum rate. The transitional agreement under Towards 2016 was not agreed. ICTU has been in contact with the Labour Court requesting that it set up the procedure of striking a rate. The court has contacted the social partners and asked them for their observations, which must be submitted prior to Christmas week. The court will then adjudicate on them, following which I will be handed the unenviable task of accepting, rejecting or amending them.
With regard to the joint labour committees, JLCs, in the hotel and catering industries, we have set in motion the amalgamation of the two catering JLCs — Dublin and the rest of the country. They met last Friday and they have more or less agreed the procedure. I requested the Labour Relations Commission to appoint a chairman so that everything can be done as quickly as possible. It is up to the members of the JLCs to agree rates, pay and conditions at the end of the day. Everybody accepts the catering and hotel sector are facing pressures and challenges. IBEC and ICTU are in discussions regarding the hotel sector because everybody acknowledges the pressures in both the broader economy and, in particular, in that sector.
I am concerned about breaches of the minimum wage legislation. Whether people like it, it is the minimum wage. The Parliament and the social partners have agreed this is the minimum amount to which an employee is entitled for a fair day's work. Most Members will support that ethos. NERA is targeting compliance with the legislation to ensure the most vulnerable are paid that rate and, more important, are paid arrears.
Following the "Prime Time Investigates" programme recently, which appeared to reveal a significant number of serious breaches of legislation in both the restaurant sector and the road haulage industry, will the Minister of State target the inspectors at these sectors to establish what is going on and to tidy them up since they must account for significantly more breaches than other sectors?
Will the Employment Law Compliance Bill make provision for on-the-spot fines or something more immediate to deal with these cases?
The "Prime Time Investigates" programme highlighted two issues — exploitation in the context of pay and conditions and breaches of the Road Traffic Acts. The national minimum wage regulates payment in the transport sector because there are no collective agreements, joint industrial councils or joint labour committees in the sector and, therefore, NERA is focused on that. I do not instruct the authority on what it should do but officials carry out risk assessments and profiles of industries, engage in targeted campaigns in several ways, including education and promotion and informing employers of their obligations and employees of their entitlements and rights and they undertake targeted inspections in particular areas, as outlined in reply to previous parliamentary questions.
The Employment Law Compliance Bill is still under discussion with stakeholders. While it was published in March 2008, further discussions have taken place. Stakeholders had concerns in the context of the transitional agreement under Towards 2016 and we are trying to accommodate everybody so that we can achieve as much consensus as possible. The Bill will be introduced in the House early in the new session. I am sure there will be a lively debate on it and there will be a great deal of support among parties for it.
When will there be a full complement of inspectors in the labour inspectorate? The Government signed up to this in the previous partnership agreement but a new agreement has come into force since. The Minister of State said the new legislation to put NERA on a statutory footing cannot be implemented because of the lack of agreement to date with the social partners, yet when there is agreement on an issue, the Government cannot deliver on it.
Are there plans to establish cross-departmental labour investigation teams similar to those proposed by Deputy Morgan for the transport sector? The "Prime Time Investigates" programme also exposed the flouting of tax laws. It is critically important to have that mechanism up and running as soon as possible so that a co-ordinated approach can be adopted on this issue.
The Deputy has raised the issue repeatedly for the past year. We are living up to our commitments under Towards 2016. A total of 81 labour inspectors are in place and no Deputy can deny they have been on the ground enforcing pay and conditions under the Protection of Young Persons (Employment) Act 1996, the Organisation of Working Time Act 1997, the National Minimum Wage Act 2000 and the Payment of Wages Act 1991. Inspectors are out and about.
With regard to cross-departmental enforcement, NERA was in contact with the Road Safety Authority, RSA, in June prior to the "Prime Time Investigates" programme to ascertain where they could complement each other. The authority will also increase co-operation with the Department of Social and Family Affairs and the Revenue. The Employment Law Compliance Bill will also contain measures to ensures that happens. NERA will also be responsible for ensuring compliance with the work permits regime. Inspectors will be at the coalface and there will be full cross-agency support, for example, with the Garda on work permits, the Revenue, the Department of Social and Family Affairs and the RSA.
Sometime in the future.
No, this is happening
Everything is dependent on the legislation being implemented and we still do not know when it will be enacted.
NERA has been established on an interim basis.
However, it is not a statutory body.
It can enforce all employment rights legislation and it does so effectively.
The authority can only enforce existing legislation, which many people believe is inadequate in many sectors.
The authority has taken prosecutions and it has the full support of legislative provisions. Officials are working with their counterparts in Revenue, the Department of Social and Family Affairs and the RSA to make sure sectors are targeted where there is profiling of vulnerability.
71 Deputy John O’Mahony asked the Tánaiste and Minister for Enterprise, Trade and Employment if she is satisfied that Enterprise Ireland and Shannon Development have not engaged in excess expenditure on advertising, foreign travel, events, corporate entertainment and that they are fully compliant with public procurement policies; and if she will make a statement on the matter. [45020/08]
The Deputy will appreciate that I have no role or function in the day to day operations of Enterprise Ireland and Shannon Development. My Department has responsibility for ensuring that corporate governance procedures, systems of financial control and reporting relationships are in place within those organisations.
Both Enterprise Ireland and Shannon Development have confirmed that they operate in accordance with the framework code of best practice set out in the code of practice on the governance of State bodies. The code demands that boards "introduce controls to prevent fraud including adequate controls to ensure compliance with prescribed procedures in relation to claiming of expenses for business travel." Each year both agencies confirm in their annual reports that they are in compliance with that code. Additionally, I receive a separate report from their chairpersons affirming that they are in compliance with payment of expenses to the board.
I have been advised by Enterprise Ireland that it has taken steps to ensure an appropriate control environment is in place by establishing formal procedures through various committee functions to monitor the activities and safeguard the assets of the organisation, clearly defining and documenting management responsibilities and powers and developing a strong culture of accountability across all levels of the organisation.
Enterprise Ireland has an internal audit department that operates in accordance with the internal audit charter approved by the audit committee of the board. This committee meets on a quarterly basis to review reports prepared by internal audit and other departments. The audit committee reports regularly to the board on the matters that it has considered.
Enterprise Ireland observes the Department of Finance guidelines on public procurement. The organisation has a comprehensive purchasing procedures manual which ensures compliance with purchasing guidelines and legislation for both national and European tendering.
Enterprise Ireland's advertising spend relates exclusively to its public calls for proposals and publicising applications to its three national competitive funds for Irish enterprises.
Additional information not given on the floor of the House.
Shannon Development has confirmed to me that, on the basis of the systems and processes in place, all appropriate procedures for financial reporting, internal audit, procurement and asset disposals are being carried out by Shannon Development, that the company has not engaged in excess expenditure on advertising, foreign travel, events, and corporate entertainment and that the company is fully compliant with public procurement procedures.
With regard to foreign travel, I have been assured that both agencies comply with Department of Finance regulations. In addition, in the light of recent concerns in this regard, the Department of Finance's main guidelines on foreign travel have again been circulated to all agencies and they have been asked to confirm by 15 December that the guidelines are being complied with. The situation will be monitored under existing liaison arrangements between the Department and Shannon Development.
I look forward to reading the balance of the reply. The purpose of this question is to ensure that given the poor oversight of FÁS actions are being taken by Government to ensure we do not have similar activities in other agencies. I am happy to hear that work is being done in this regard. I am not aware of any waste or particular allegations with regard to these agencies but a cursory reading of their budgets shows one very obvious expense which is the extent to which all of these agencies have heavy staff costs and overheads. More than two thirds of Enterprise Ireland's budget goes on staff costs and overheads and less than one third is spent on grants to business. This is not to state there is impropriety or wrongdoing. Does the Minister of State share my concern that all of these agencies seem to have phenomenal costs with regard to overheads and staff relative to their core work which relates to support for business?
With regard to Shannon Development the same applies. We receive reports and it is monitored.
Enterprise Ireland has 31 offices throughout the world so its activities must be taken into account with regard to its cost base and what value we get for it. With regard to missions abroad and what they achieve for business in Ireland I believe they give value for money in this context and I have quoted these figures previously, including €65 million in China and €25 million in Dubai. It must be measured against activities and its level of presence in other economies and throughout the world. In the context of public sector reform I am sure the numbers will be examined. My views on this are known and I will continue to express them and hope we will have an efficient and professional public service for the future.
Deputy Varadkar will probably agree with the Minister of State but I will not.
Deputy Penrose just wants to borrow another €2 billion. That would definitely work.
We are more flexible over here.
These are all top-class questions today. They might as well have come from me.
There are now two socialists in the House.
It is going in the right direction.
It is.
The Minister of State's reply stated an audit committee is in place and it reports. This is great news. However, is the Minister of State satisfied it is fulfilling its function properly? Like Deputy Varadkar, I have no information that anything is wayward at Enterprise Ireland or certainly nothing remotely like what was going on at FÁS. Nevertheless while structures are in place it is important to know they report accurately and that the system in place is sound. Is the Minister of State aware this is the case?
I do not accept what the Deputy states. These organisations and Departments come before the Committee of Public Accounts and every year their accounts are examined.
So did FÁS.
It did not take that for this to happen. It has been happening and is happening in every State agency. Enterprise Ireland and Shannon Development have the same controls within their systems and have reported to my Department. I am answering the question before me on these organisations. I gave a reply on Shannon Development and Enterprise Ireland.
I asked a supplementary question.
Enterprise Ireland has 1,151 activities abroad in more than 30 offices.
It is not the activity but the result that matters.
Whether there are controls within the organisations is reflected in the context of their annual reports and the audit procedure within the Committee of Public Accounts and the Comptroller and Auditor General.
Is the Minister of State satisfied they are working well?
I am satisfied that I have received reports that they are working well.
72 Deputy Jimmy Deenihan asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on whether the payment of a redundancy payment followed in the rehiring of the same staff member with inferior terms and conditions is a genuine redundancy; and if she will make a statement on the matter. [44957/08]
74 Deputy Joe Carey asked the Tánaiste and Minister for Enterprise, Trade and Employment if the practice of paying somebody redundancy and then rehiring them, known as leave and return, comes within the Redundancy Payments Act 2003; and if she will make a statement on the matter. [44967/08]
I propose to take Questions Nos. 72 and 74 together.
In general, a redundancy arises where an employee's job ceases to exist, and the employee is not replaced for such reasons as rationalisation, reorganisation, insufficient work available, the financial state of the firm and company closures.
Redundancy is determined in line with strict criteria set down in the Redundancy Payments Acts 1967-2007 on the basis of claims submitted to my Department after the event of the redundancy. Redundancy is therefore determined having regard to the terms of the legislation and on the basis of fact and law. Where a genuine redundancy is deemed to exist, it is a legal entitlement, not a matter of discretion. Thus, in considering applications for payment, full account would be taken of the factual circumstances giving rise to the redundancies in parallel with the legislative provisions to establish the fit with the redundancy payments scheme.
The legislation enables the Minister to refer particular cases to the Employment Appeals Tribunal for a determination to establish the eligibility of cases under redundancy legislation. Therefore, while a preliminary view can be formed in advance as to the chances of any particular set of circumstances fitting the terms of the redundancy payments scheme, it is just that, a preliminary view. The actual decision will only be taken after the fact. Any decision will be taken in light of the circumstances that have transpired, in full knowledge of the terms of the redundancies offered, the pattern of take up, the nature of the changes in the workplace and so on.
This relates to the previous question on Aer Lingus. Will the Minister confirm that no preliminary view was given or sought from the Department with regard to these redundancies?
The Department was approached.
Did it give a preliminary view?
An approach was made to the Department seeking a preliminary view but it was on the basis of the initial proposal that was brought forward. As the Deputy knows, we moved beyond this initial proposal. Legal advice has been sought on the basis of giving a preliminary review but as the Deputy knows it is not legally binding and therefore we are not in a position to give a full determination. At the same time, it is important to state that the preliminary view was given on the initial application or consideration of the first application and then it was changed. As I stated and as has been indicated and there has been a great deal of interaction between the social partners and ourselves, it is only a preliminary view that can be given. If it is straightforward it can go through the normal processes but for absolute clarity the matter would need to go before the Employment Appeals Tribunal.
Accepting the caveat outlined by the Minister, that a preliminary view was given on the initial proposal, what preliminary view was given by the Department?
The preliminary view given to ICTU and IBEC at the time was that while it was not a legal interpretation and not legally binding, it appeared the proposals made by Aer Lingus in respect of redundancies as set out in the alternative proposal may qualify under the redundancy payment scheme. As I stated, I must be careful that it is only on the basis of a preliminary view and does not have a legal understanding which is provided for within the legislation. It will also be based on what claims will be made.
73 Deputy Joe McHugh asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the impact the reduction of VAT in Northern Ireland and the increase here will have on the retail and services sector in the Border counties; and if she will make a statement on the matter. [45007/08]
While the United Kingdom VAT reduction will have some effect on price differentials between UK and Irish goods, the reduction in the value of sterling will have a greater impact on the price of goods in the North than the VAT differential. Moreover, as the British Government is increasing excise duties on alcohol, cigarettes, petrol and diesel to offset the 2.5% VAT reduction on these items, the UK budget change will not enhance the attractiveness of these items to cross-Border shoppers.
In addition, approximately half the value of goods and services purchased in the State are not subject to the standard VAT rate and therefore are unaffected by the recent budget changes in Ireland and the UK. For example, all Government services, local authorities, hospitals, schools and so on are exempt from VAT. The majority of foodstuffs, oral medicines, books and children's clothes and shoes come under the zero rate of VAT. Furthermore, the 13.5% reduced rate of VAT applies to housing, electricity, gas, domestic fuels, restaurant services and labour intensive services such as hairdressing and shoe repair.
The latest Central Statistics Office bulletin for October shows that consumer prices continue to fall, with overall annual inflation at 4%, down from 4.3% in September. This compares with an annual rate of 4.2% for the United Kingdom all-items retail price index. With regard to the retail sector, the Tánaiste and Minister for Enterprise, Trade and Employment requested Forfás in September to carry out an analysis of the relative cost of doing business in various locations in the Republic, Northern Ireland and Britain. The Minister has already commenced discussions with a cross-section of retailers on the preliminary findings of the study. We are committed to promoting competition and raising consumer awareness in order to drive competition for goods and services traded domestically. We are also tackling administrative burdens with a view to keeping costs for enterprises under control. Ireland's cost competitiveness is also supported by relatively low taxes on labour and enterprise.
With regard to services, both the services sector and the growing services element within manufacturing companies are vital to the next stage of our economic performance. We recently carried out an evaluation of the specific needs of the services sector. The report of the services strategy group, Catching the Wave: A Services Strategy for Ireland, was published on 12 September 2008. This report will guide the development of our services strategy into the future to exploit the opportunities available in this sector. A particular focus of the strategy is on locally traded services. It is increasingly recognised that local services are a significant source of wealth creation and employment in their own right, as well as providing essential underpinning for internationally trading business and for social and cultural development. My Department is working with the enterprise agencies and with other Departments to progress the implementation of the report's recommendations.
There is a broader issue in regard to competitiveness and costs. The Tánaiste referred in last night's Private Members' debate to a differential of 5% in price differences between North and South. Is this figure taken from a Forfás report that has not yet been published?
Yes.
Some of the difficulty in regard to the VAT differential is one of perception among consumers. People are heading for the Border in large numbers and they cannot get there quickly enough. I noticed a race between motorists and Tesco delivery lorries on the M1 one Thursday morning.
Who was the winner?
The six Tesco lorries were obstructed by the number of motorists coming from the South. I heard recently that retailers in Derry cannot get fork-lift drivers to unload stock from the trucks quickly enough.
I have a simple mathematical question for the Minister and her Ministers of State. What is 21.5% of nothing?
Deputy McHugh will have to table a parliamentary question on that.
The reality is that 21.5% of nothing is nothing. The British Government has reduced the rate of VAT in an effort to get money into tills. That is what will get the economy moving again.
The Deputy should give way if he wants an answer to his question.
We must face up to that challenge. Retailers cutting their margins will not be enough to re-stimulate economic activity.
I ask the Deputy to resume his seat.
Neither the Minister nor her Ministers of State were able to answer that simple mathematical question.
That is a good Second Stage speech. I have called Deputy Morgan.
Does the Minister of State agree that the harmonisation of revenue rates, including VAT, across the island would be the best solution to the difficulties presenting in terms of disparate VAT and corporate taxation levels? Does he agree further that an immediate 2% reduction in VAT would provide a stimulus to retailers, particularly on this side of the Border?
Does the Minister of State accept that the Forfás report will indicate that the cost of operating in this economy is 32% greater than what prevails in the United Kingdom? Does he agree it was a useful exercise on the part of the Joint Committee on Enterprise, Trade and Employment to call on the Commissioner for Energy Regulation not to increase the prices of oil, gas and electricity? Does he accept that it was an act of economic lunacy, given the economic meltdown we are facing, even to contemplate increasing the rate of VAT, with the associated serious impact for consumers?
This is particularly so in regard to the Border counties.
Surely it was the very opposite of what was required. It is time to reverse engines.
There is a 5% differential in costs between the Republic and the North according to the preliminary results of the study to which I referred. I agree with Deputy McHugh's initial statement that there is a particular perception, even though the changes in certain sections of the VAT regime do not apply to everything. As I observed in my reply, more than 50% of the goods and services traded are not affected by the VAT changes. It is important to recognise that the depreciation of sterling against the euro is having a significant effect. Deputies can be assured that the Department is in constant negotiations with retailers, who have a duty of care to their customers both North and South.
The Government cannot blame retailers.
I have given the facts.
