Vol. 913 No. 2
33. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation the status of his investigations and follow-up following the closure of a company (details supplied); if all company law provisions were complied with; and if she will make a statement on the matter. [15766/16]
I am asking for a status update on the review by the Department of the Minister of State, Deputy Pat Breen, and the review by the Office of the Director of Corporate Enforcement into the sudden closure of Clerys. The Minister of State will appreciate that it is now 15 June and that the company closed three days ago last year. We have just passed the first anniversary. Clerys was iconic and was trading on O’Connell Street in Dublin for 162 years. It had 134 direct employees and in excess of 300 employed by concessionaires within the store. The news was very disturbing across so many levels. The closure was even discussed during a recent Private Members’ debate. So many issues arise in regard to employment law.
I thank Deputy Niall Collins for raising this issue. The closure of Clerys department store and the manner in which its workers lost their jobs was totally unacceptable and should not happen again.
A number of actions were initiated as part of the Government’s response to the closure of Clerys. They included the Duffy-Cahill expert examination of legal protections for workers. The Duffy-Cahill report was published on 26 April last, as the Deputy knows. It makes a number of proposals for reform of the law. My priority now is to complete the public consultation to allow for a response to be brought forward for consideration by the Government. I remind the Deputy that the consultation is to finish this Friday.
The Company Law Review Group was asked to review company law. This was with a view to recommending ways company law could be amended to ensure better safeguards for employees and unsecured creditors. The work of the Company Law Review Group is progressing in this regard.
Separately, authorised officers have sought information from a number of parties regarding the collective redundancies that took place in OCS Operations Limited on 12 June 2015. This work is ongoing. However, one of the parties from whom the authorised officers sought information initiated proceedings in the High Court challenging the powers of the authorised officers. As the matter is before the court, it would not be appropriate for me to comment any further.
With regard to compliance with company law, this is ultimately a matter for the court to decide in any particular case before it.
I want to focus on a couple of areas. We all agree it is imperative that the legal framework that we put in place be fit for purpose in dealing with any future case similar to that of Clerys. I also want to focus on the Protection of Employment Act 1977, which provides that where an employer is considering collective redundancies, there is an obligation to consult employees and provide certain information to employees for the purpose of the consultations. This was obviously lacking in the example of Clerys. Flowing from that, workers’ representatives have campaigned. The Duffy report recommended the removal of the insolvency exemption from the prohibition on implementing collective redundancies during the consultation period.
Section 14 of the Protection of Employment Act provides for the exemption from the prohibition against giving effect to collective redundancies until the expiry of 30 days after the notification to the Minister in circumstances of insolvency. Does the Minister of State support the 30-day notice requirement under the Protection of Employees Act 1977 in so far as it would apply to all collective redundancies, including in the case of Clerys?
I wish to focus on section 224 of the Companies Act 2014. It states directors shall have regard to the interests of employees. It provides that "The matters to which the directors of a company are to have regard in the performance of their functions shall include the interests of the company's employees in general, as well as the interests of its members." The directors obviously have an obligation to themselves, their shareholders and the company but, equally, they have an obligation to the employees. Is the Minister of State happy that section 224 of the Companies Act 2014 was complied with in the case of Clerys? Can he comment on that? My other question was on the 30-day notice requirement under the Protection of Employment Act.
I thank Ms Nessa Cahill, a company law specialist, and Mr. Kevin Duffy, the chairman of the Labour Court, for the work they have done. They are very distinguished, professional people. As the Deputy knows, the idea behind the report was to focus on limited liability in corporate restructuring and the view that it would not be used by a company to avoid meeting its obligations towards employees.
The Protection of Employment Act 1977 imposes a number of obligations on employers who are contemplating collective redundancies, including the obligations to consult employees and to provide certain information to employees for the purpose of the consultation. As I said, authorised officers sought information from a number of parties, but since the matter is sub judice, it would not be appropriate for me to comment any further on it.
With regard to the company law aspect, about which the Deputy spoke, the report does not propose that any amendments be made to the existing provisions of the Companies Act 2014. However, it does state in clear terms that the existing company law provisions provide substantial weaponry that could be used against directors and related companies to redress the effects of and deter harmful transactions.
These provisions are only of weight if the persons are employed and seen to be employed. The report makes proposals designed to facilitate and support the use of these proposals in future cases.
While we all appreciate that much of this discussion is technical and observers could reasonably ask what it is about, we must also bear in mind those whose lives and jobs have been seriously affected by this case. We must also have regard to the fact that the Oireachtas cannot dictate to the courts how quickly they should act or what decisions they should make. Notwithstanding this, a degree of urgency is required.
Section 599 of the Companies Act deals with the relationship between companies and, more generally, provides mechanisms whereby one company can be required to contribute to the indebtedness of the other. As the Minister of State is aware, the Clerys case involved a multi-company structure. The Duffy-Cahill report states:
It therefore seems that section 599 is a potentially useful provision to address the concerns outlined in the Terms of Reference. It is only when this provision has been tested by the courts that any necessary amendments may become apparent.
In reply to a recent parliamentary question, the Minister for Social Protection indicated he was considering how the provisions of the Companies Act 2014, including section 599, might be used to recover moneys expended from the Social Insurance Fund. Is the Minister of State in a position to update the House on that issue and, if not, will he furnish such an update afterwards?
The Department of Social Protection, as a creditor, is considering how the provisions of the Companies Act 2014, including section 599 to which the Deputy referred, might be used to recover moneys expended from the Social Insurance Fund.
The Duffy-Cahill report is a comprehensive document which makes a number of proposals that need to be considered together as no single proposal will provide a solution. My priority is to ensure that these events are not repeated in the case of any other company. My second priority is to complete the public consultation and that will be done on Friday next. The stakeholders, including the business employers, trade unions and others, have been consulted. The Company Law Review Group has also made recommendations in respect of company law. The role of the Department is to formulate detailed proposals as quickly as possible to ensure this case is not repeated.
34. Deputy Maurice Quinlivan asked the Minister for Jobs, Enterprise and Innovation if she will make retention of the 9% value added tax rate to the hospitality sector conditional on its engagement with the Labour Relations Commission and acceptance of registered employment agreements, given that this sector has an embedded culture of widespread low pay; and if she will make a statement on the matter. [16247/16]
The hospitality sector has always been an important part of the economy. The sector is experiencing a period of growth and employs more than 137,000 people. More than 23,000 jobs have been created in hospitality since 2011, largely supported by lower VAT rates. According to the Irish Hotels Federation, the national hotel occupancy rate is at a ten-year high and 82% of hoteliers across the State have benefited from this. However, while business is booming, which is welcome, the 9% VAT costs the State an estimated €350 million per annum.
The Deputy should conclude. He is eroding the time for the question, on which he may contribute again.
I thank Deputy Quinlivan for his question.
The setting of VAT rates is a matter for the Minister for Finance. In July 2011, the VAT rate for tourism-related goods and services was reduced from 13.5% to 9% by the Government as part of a measure to promote job creation. This incentive for job creation was due to expire at the end of 2013 but the measure was retained in budgets 2014 and 2015 owing to its positive impact on the sector.
Between the second quarter of 2011 and first quarter of 2016, direct employment in the accommodation and food services sector increased by 28,000, from 114,400 to 142,400. While it cannot be claimed that the reduction in the VAT rate has been the only factor driving employment in the sector, it has made a significant contribution and has had a very positive impact on the competitiveness of the tourism product.
Ireland has a robust suite of employment rights legislation to protect all workers, including minimum wage legislation. These rights apply across all sectors. Other wage setting frameworks include joint labour committees, registered employment agreements and sectoral employment orders which are underpinned by recent legislation. Engagement in these frameworks is voluntary on the part of the stakeholders concerned.
The reality for workers in the hospitality sector is that more than 50% of the 130,000 people working in accommodation and food services earn less than €400 per week. In addition, 17% of all other employees in the sector earn only the national minimum hourly wage and 41% of employees in the sector work part-time. While the average wage is €697.52, in the hospitality sector it is €324.86. Recent research by TASC, the Think-tank for Action on Social Change, describes the sector as characterised by what are effectively zero-hour contracts. The Mandate and SIPTU trade unions, which represent workers in the hospitality sector, and the Irish Congress of Trade Unions have all condemned the outrageous campaign of misinformation waged by employer interest groups in the hotels, restaurants and service sectors against the decency threshold, namely, the joint labour committee system. The Irish Hotels Federation and the Restaurants Association of Ireland have falsely portrayed workers in the sector as a privileged group receiving vast earnings which make businesses unsustainable and result in job losses.
Thank you, Deputy.
Ireland is a deeply unequal society in which service workers, predominately women, are undervalued and underpaid.
I call the Minister of State.
I suggest that the retention of the lower VAT rate be conditional on the hospitality industry engaging with trade unions.
Deputy Quinlivan, as a representative of Limerick, will be aware of the importance of tourism to the mid-west region. As a Deputy from County Clare, I know how many people visit King John's Castle alone.
The Deputy referred to the Irish Hotels Federation and the judicial review of May 2014 pertaining to the payment of workers outside Dublin and Cork. As I stated, the setting of VAT rates is a matter for the Minister for Finance. The purpose of the reduced VAT rate for the hospitality sector was to support employment creation. As I indicated, the number of jobs created in tourism since the introduction of the lower VAT rate far exceeded expectations. The partnership for Government includes an ambitious project to create 200,000 jobs by 2020, including 135,000 jobs outside Dublin. With 50,000 jobs created this year, we are on track to achieve our target of reducing the unemployment rate to 6%.
While I understand the Deputy's position on this issue, a balance must be struck between work and decent pay for workers. The Low Pay Commission is addressing the issue of the minimum wage and will publish its report in the third week of July.
The refusal by employers in the hospitality sector to participate in the joint labour committees structure and agree on the terms, pay and conditions of employment is not acceptable, particularly when the same sector is in receipt of significant public moneys.
Recent correspondence indicates that an accommodation has been reached with the parties in the hotel sector on terms that are agreeable to both sides. As the Deputy will be aware, the case has been adjourned and the parties are at liberty to re-enter it.
We have to be very careful with this. It is important to ensure that people have a decent wage. The Low Pay Commission was set up to look at that. The hospitality sector has been targeted in respect of low pay. As far as I am concerned, we will review this when the Low Pay Commission produces its report.
35. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation how she will tackle the severe competitiveness challenges facing Irish business, as identified by the National Competitiveness Council report entitled Costs of Doing Business in Ireland 2016; and if she will make a statement on the matter. [16124/16]
We all agree that one of the upsides of the recession, if we could describe it as an upside, was an end to the rip-off culture - and rip-off Ireland - that was so dominant during the era of the Celtic tiger. However, there is without doubt a concern among consumers and business that we are seeing the approach of a lack of competitiveness, tending towards a culture in which people are beginning to get ripped off again. I imagine the Minister is hearing this too. I tabled the question against that background.
I am pleased Deputy Collins has raised this issue.
Overall, the National Competitiveness Council has concluded that Ireland's cost base has improved over the past five years. We are now ranked seventh in the IMD World Competitiveness Centre report. However, we cannot be complacent. Ireland remains a relatively high-cost location for several key business inputs. Significant cost pressures remain for many Irish-based companies, especially property and business services.
The Government is committed to the costs elements within our control. However, some significant cost pressures are outside our control, including oil prices, exchange rates and Brexit. Our focus must be on those costs over which we have some influence within Ireland. The Action Plan for Jobs has a number of actions across Government to support cost competitiveness. These include, for example, the cost of credit and insurance costs. The Government has also placed a priority on addressing property and housing costs. I assure the Deputy that I will continue to work with other Ministers on cost issues. I am keen to ensure the council's recommendations are considered by the relevant Cabinet committees. My objective is to foster a competitive business environment for all businesses.
Deputy Collins referred to the rip-off culture. As Minister, I do not want to see that re-surface in Ireland. I will be keeping a close eye on this, as will my Department and the Cabinet committees investigating and dealing with this matter.
I acknowledge the IMD World Competitiveness Center ranking. Equally, however, I am keen to point out that Ireland has continued to plunge in the World Bank ratings. We have dropped four places to 17th out of 189 economies. We are dis-improving by that parameter.
According to the National Competitiveness Council cost of doing business in Ireland 2016 report, new businesses in Ireland are paying 80% more in interest rates for loans than our European counterparts. Moreover, Irish consumer prices are 20% higher than the euro area average, SME prices have increased by over 20% and, despite the legislation passed during the last Dáil, legal services have increased by approximately 6% since 2010. We debated the cost of insurance last week in the Oireachtas but insurance costs have increased by 60% in two years - almost 30% per year. Let us put this into context. The ESRI has stated that industrial output would increase by 2% for every 1% improvement in our competitiveness. In other words, it would represent a 2:1 gain if we could tackle our competitiveness. What plans does the Minister have to create a regulatory environment that would improve our competitiveness and lower the cost of doing business and attract new business into the country?
I assure Deputy Collins that my Department is working hard on this. We have the Action Plan for Jobs and the regional action plans to ensure that jobs come into the country. Competitiveness is on the top of our agenda as well as bringing in jobs.
We are looking at wages. Wages are mainly set in the private sector. I am mindful of the issues Deputy Collins has raised, including the cost of borrowing and insurance and so on. As I said, I will ensure there is a focus on these matters throughout the Departments. We must continue to use our taxation policies to promote a business-friendly environment. That is what we are about in the Department for Jobs, Enterprise and Innovation. I will ensure these issues are raised for business with the Minister for Finance.
I wish to touch on the issue of our infrastructural deficit, a matter of major concern. There are many examples throughout this city and the rest of the country, including my region. These include the Limerick to Cork motorway and the Limerick to Waterford motorway. The road from Gort to Galway has to be finished. There are many parts to it. Broadband is chaotic throughout the country and this is inhibiting business and the consumers who want to transact with business over the Internet on a real-time basis. It is seriously problematic, as the Minister is aware. What are we going to do about it?
Has the Minister given any consideration to the establishment of a national infrastructure commission to plan for the horizon of 20, 25 or 30 years and properly address our infrastructural deficit? The deficit is feeding in to our employment issues, imbalance in the regions and competitiveness.
We have identified the issues relating to broadband in the programme for Government. I will be working with the Minister for Arts, Heritage and the Gaeltacht, Deputy Humphreys, on this issue. I am aware of it. I am from County Galway and I know there is little broadband in Milltown, County Galway. This is on my priority list.
Deputy Collins referred to road infrastructure. I was in Limerick promoting jobs and meeting various stakeholders there. This issue was brought up and the point was made strongly to me. Again, I am afraid neither I nor my Department can take responsibility for the roads but I will ensure the Department of Transport, Tourism and Sport knows exactly how important this is. We know that we need proper infrastructure to bring in multinational firms and for our indigenous companies to work well.
36. Deputy Mick Barry asked the Minister for Jobs, Enterprise and Innovation to outline her views on zero-hour contracts; if she will introduce legislation to outlaw this practice; and if she will make a statement on the matter. [16244/16]
What are the Minister's views on zero-hour contracts? Will she introduce legislation to outlaw this practice? Will the Minister make a statement on this matter?
I thank Deputy Barry for raising this important issue. I am committed to considering an appropriate policy response to the report of the University of Limerick study of zero-hour contracts and low-hour contracts. As Deputies will be aware, the University of Limerick was appointed in February 2015 to study the prevalence of zero-hour contracts and low-hour contracts and their impact on employees. The study, published in November 2015, found that zero-hour contracts, as defined within current Irish employment rights legislation, are not extensively used in Ireland. It found low working hours can arise in different forms in employment contracts. There are regular part-time contracts with fixed hours or a contract with if-and-when hours only or a hybrid of the two. Under if-and-when contracts, workers are not contractually required to make themselves available for work.
The UL report made a range of recommendations relating to contracts, hours of work and notice, minimum hours, how contracted hours should be determined, collective agreements, data gathering and wider contextual issues. The UL study was an independent study and the conclusions drawn and recommendations made are those of UL. Therefore, it is essential for the Government and my Department to seek the views of stakeholders. To this end, my Department has sought submissions from interested parties by way of a public consultation. A large number of submissions were received in response to the consultation.
The responses contain a variety of views both for and against the findings and recommendations as made by UL. These responses require, and are currently being given, careful consideration by my Department. The study and the responses to it will be considered by Government with a view to agreeing the actions that should be taken.
The report may state zero-hour contracts are not extensive, but tens of thousands of people are affected by zero-hour contracts alone, apart altogether from the if-and-when contracts and the other low-hour contracts the Minister of State mentioned. These people have enormous difficulty organising child care, credit, bank loans and mortgages and accessing benefits, including FIS. In addition they have difficulty organising rent and paying for groceries or school uniforms when they do not know what their hours or salary will be the following year.
UL reported back to the Department more than six months ago. Can the Minister of State give the House a more definitive timeframe as to when he will bring forward legislation or if he intends to introduce legislation at all?
I thank Dr. Michelle O'Sullivan and her team at the Kemmy Business School for preparing the report. The report pointed out that zero-hour contracts are not exclusively used. There is, of course, evidence of if-and-when contracts. The Deputy is right in pointing to a lack of clarity regarding employment status. That is something that is also evident. I believe the Deputy is referring to if-and-when contracts more than to zero-hour contracts. People will argue about the unpredictable hours. The Deputy rightly pointed to the difficulties in managing family life, the unstable income and access to credit institutions. Often people with these contracts work more hours than they are contracted for.
As I pointed out - I believe the Deputy agrees with me on this - we must give this report detailed and careful consideration. It is an independent report. Some 47 responses were given and the majority of those from trade unions and NGOs recommended implementation of the report and on the other hand employer and business groups opposed the implementation of the report. That is why we have to give this careful consideration and it takes time. We will do that and we will try to publish the report as quickly as possible after we give it that consideration.
It does not surprise me that employer organisations have come out against a ban on zero-hour contracts. It would not take a commission or a rocket scientist to work that out.
Is the Minister of State aware that the New Zealand Parliament voted unanimously to ban zero-hour contracts and that became effective on 1 April? In New Zealand employers now must guarantee a minimum number of hours per week and workers can refuse extra hours without repercussion. Is the Minister of State concerned that legislation here lags behind the example set by New Zealand? Is he aware the previous Administration, in the aftermath of the Dunnes Stores strike in April 2015, promised to take action on this matter? As it is now more than a year on, how long is the Minister of State prepared to wait on this? Can he give those workers who are in these extremely difficult circumstances any indication as to when he plans to bring forward legislation or does he plan to introduce legislation at all?
This was a very serious report, but it is an independent report. As the Deputy rightly pointed out there will be different views on the matter. The trade unions and NGOs will support the recommendations and the employer and business groups will be against it. Those of us in government and the Department have to strike a balance regarding the employers and the workers. This will take time. We do not want to rush this. We want to ensure that careful consideration is given here.
Some of the people who made submissions want to have meetings with departmental officials. We will consider all that in the context of the study itself. If legislation is necessary, obviously this is something we have to look at seriously. We will, after careful consideration, deal with this in the interests of workers and employees.
37. Deputy Clare Daly asked the Minister for Jobs, Enterprise and Innovation the checks she performs during the application process for the export of dual-use items to ensure that they will be put to commercial and not military use in their country of destination; and if the findings of the small arms survey regarding the lack of transparency around the arms trade in countries like Saudi Arabia and the United Arab Emirates have caused her to strengthen and intensify the checks involved in exporting to countries with poor records of transparency or to consider banning exports to these countries outright. [15630/16]
This question follows on from a question I asked the Minister's predecessor about commercial licences for dual-use items. He told me at the time that the Department's key consideration when dealing with these applications is concern over the end user or the proposed end use and that it would not be for any illicit purposes. However, how can we be sure, particularly when we are talking about countries with an appalling record in transparency? Would an export ban not be a more appropriate way of dealing with it?
My Department is responsible for licensing the export of dual-use items. All applications for the export of dual-use items are reviewed by my officials on a case-by-case basis. The licensing process centres on ensuring, as far as possible, that the item to be exported will be used by the stated end user for the stated end use and will not be used for illicit purposes. My officials seek observations from the Department of Foreign Affairs and Trade on the majority of export licence applications received. That Department provides feedback on any foreign policy concerns that may arise in respect of a proposed export.
The small arms survey provides an overview of the international trade in small arms and light weapons. As the Deputy notes the latest bulletin highlighted transparency concerns around the arms trade in Saudi Arabia and the United Arab Emirates. My officials have reviewed details of all licences issued for the export of military items and components to those countries from 2007 to date. I can confirm that my Department has not issued any licences for the export of small arms and light weapons to Saudi Arabia or to the United Arab Emirates during that period.
All export licence applications are considered having regard to EU sanctions. There are currently no sanctions in place for Saudi Arabia or the United Arab Emirates.
I note the Minister's figures for this year. In 2014 there were 50 dual-use licences for exports to Saudi Arabia and in 2013 we issued nine military licences for export to the same place. If she is telling me there are no current ones, that is good. However, I would be very surprised to hear there are no current dual-use applications before the Department because in 2014 to the UAE there were 51 such applications. Dual-use items are not innocuous; they can have a military role.
We are trying to get to the heart of the following question. What are the mechanisms to scrutinise this? The small arms survey was quite shocking in revealing a lack of transparency in these countries particularly. They are among the least transparent in terms of arms trading. The UAE came last. Saudi Arabia was below North Korea and Iran. Ammunition sold to Qatar, for example, has ended up in Libya. There is a European Parliament ban on military exports, but the Netherlands has gone further and banned dual use exports.
I have read the report on transfers and transparency. We do not feature in these reports as we do not have an arms industry and do not export small arms and light weapons. However, I take the Deputy's point that we manufacture components in the data industry that may be used. However, we are very careful and any application that comes to my Department undergoes strong and rigorous checks. The licence application is really scrutinised. We check with the Department of Foreign Affairs and Trade and we ensure we do not contravene it.
I would also say that we are very careful. It is my intention to intensify the auditing process around export control and dual-use items. An additional staff member will be employed in the export licensing section.
I am glad we have more resources. I would argue that we probably need even more again. The European Parliament voted on an arms embargo to Saudi Arabia because of the atrocities in Yemen. As I have said, the Netherlands went further by imposing a full embargo on dual-use items as well. That would be the most suitable approach in our case. Most of the dual-use items exported by Ireland to the United Arab Emirates, Qatar and Saudi Arabia are category 5 items that are described as telecommunications and information security items. While that might sound innocuous, it can include telemetry, telecontrol and ground equipment that can be designed or modified for use with missiles, as well as radio jamming equipment, laser equipment and so on. It is quite wide-ranging. I remind the Minister that we exported straight-up military items worth €3.2 million to Saudi Arabia in 2013. We definitely need more checks. I do not think one additional person will be enough.
The Deputy has mentioned the export of sophisticated technology. I remind her that the Department may refuse an export licence and has done so on many occasions. We denied four licences in 2011, one licence in 2012, four licences in 2013, eight licences in 2014, five licences in 2015 and one licence to date in 2016. We have very rigorous checks. I will make sure they are maintained. If non-compliance is proven, my Department has the power under legislation to take proceedings against exporters. Fines of up to €10 million, or terms of imprisonment of up to five years, can be imposed on exporters who are found guilty.
