I welcome the opportunity to speak on the Bill. The Bill arises from the striking down of the joint labour committee, JLC, and employment regulation order, ERO, legislation by the courts. It had been hoped that the Bill would have been introduced earlier than this but it is before the House now and I intend to oppose it.
The effect of the Bill is a decision by the Government to cut the wages of the lowest paid workers in this country. The exclusion of the Sunday premium is a direct cut in wages for the lowest paid workers. More than 200,000 low paid workers are affected by this legislation. This comes at a time when everybody, particularly the low paid, is under significant pressure due to the recession. The Government is ensuring that people such as these workers, who had no hand, act or part in the creation of the recession, are being made to pay for it and is piling more misery on them by effectively cutting their wages.
It is all very fine for Members of the Dáil and the Seanad who have healthy incomes and are effectively immune from the recession. However, we are introducing a Bill the effect of which will be to reduce the income of people on the lowest rungs of the ladder. In doing that we are increasing inequality in the country. There is already clear evidence that the gap between rich and poor has been widened in the past number of years and this Bill will widen that gap further. It piles further misery on a group of workers who are being hit left, right and centre to pay for a recession they did not create.
At the same time, very wealthy individuals are not paying their fair share of tax. Figures from the Central Statistics Office in October last year showed conclusively that the net financial assets of the wealthiest people in this country had increased by €46 billion in 2009 and 2010. In the teeth of the recession very wealthy people in this country have increased their wealth by enormous amounts. These people pay no wealth tax, even though a wealth tax is a normal method of taxation in other countries, including in the United States of America. They have huge incomes and assets but no wealth tax, yet this Bill will reduce the weekly income of the lowest paid people in the country. That is unacceptable. It is an insult to those people and it should and must be reversed.
The reduction in income of these workers will also have an effect on the economy by reducing demand, which will have a knock-on effect on every high street in every town and city in the country. We already have seen the closure of retail businesses in towns and cities. This Bill will mean there will be less money circulating and fewer people going into the shops, which will lead directly to further closures and further reductions in employment.
As bad as that scenario is, the stakeholders on the employers' side are opposing this legislation. The Irish Business and Employers Confederation, IBEC, has said that the legislation is misguided and unnecessary, and that the entire JLC system should have been consigned to history. It also said, which I consider to be a threat, that the JLC system will be fraught with constitutional uncertainty and will be open to further legal challenge. That is the type of comment we get from the employers' side on this legislation.
There are no economic studies or statistics and there is no economic evidence to show that cutting the wages of the low paid will create employment. All the indications point in the other direction, namely, that reductions in wages reduce demand and deepen the recession.
Irish labour costs are significantly lower than the European Union average. The most recent figures available show labour costs were 6% below the EU average in 2008 and since then labour costs have declined further. Not only are Irish labour costs not out of line, if anything the figures show they are significantly below the EU average.
The Bill refers to comparisons between wages here and wages in "other relevant jurisdictions". This is a flawed approach because when making such comparisons, one cannot focus solely on wages. One must take account of purchasing power and various social supports that are available in other jurisdictions. The Bill will effectively abolishes the Sunday premium which amounts to a reduction in wages for the low paid.
The inability to pay clause undermines the joint labour committee system. The Duffy Walsh report recommended that inability to pay periods should not exceed 12 months whereas the Bill provides for a two year period. This is a significant departure from the report and one which undermines the JLC system. In addition, the legislation does not provide workers affected by an inability to pay provision with a right to examine the books of their employer. Such a right should be included in the Bill.
The Bill includes an unusual reference to unemployment as a factor which may be taken into consideration. Does this mean that the higher the unemployment rate, the lower the wage rate?
It is contended that the legislation will not affect existing contracts. Anyone who lives in the real world will be aware that while this may the case on paper, the outworking of the legislation on the ground and conditions in the workplace will ensure that, far from not having an effect on existing contracts, the Bill will make it easier for employers to force employees into changing contracts. They will give staff the impression that contracts must be changed as a consequence of the introduction of this legislation.
As I noted in respect of the Protection of Employees (Temporary Agency Work) Bill, enforcement is an important issue. The labour relations machinery of the State is in turmoil, with those seeking to avail of it facing long delays. As we all know, justice delayed is justice denied. Despite the significant problems being experienced in the area of labour relations, the legislation does not provide for additional resources to ensure enforcement is carried out properly and expeditiously.
The National Employment Rights Authority, NERA, is under-resourced. According to its most report, it carried out 2,350 inspections in 2011, a significant reduction on the previous year when it carried out 3,000 inspections. The authority also found a low rate of compliance with employment law. For example, the rate of compliance in agriculture, catering, retail and hotels was 42%, 26%, 28% and 26%, respectively. Compliance in the area of contract cleaning, which was among the better performing sectors, was above 50% and the general compliance rate was around 55%.
The enforcement of employment legislation, including this Bill and the Protection of Employees (Temporary Agency Work) Bill, both of which fall under the remit of the labour relations machinery and NERA, is insufficient because inadequate resources are available to ensure proper compliance. While I understand NERA has increased the number of its inspectors by approximately 15, these additional staff will not be sufficient to properly resource the authority.
The main problem with the Bill is that it effectively introduces a wage cut for the lowest paid workers in the State at time when very wealthy people are not paying their fair share. This is not good enough. The legislation must be amended to provide for a legal entitlement to a Sunday premium, as was the case in the past. Failing that, I will oppose the Bill because it is unthinkable that Deputies and Senators, who live comfortably and are effectively immune from the recession, would introduce legislation that would cut the wages of low paid workers.