Industrial Relations (Amendment) Bill 2009: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Senator Ivor Callely

I welcome the opportunity to participate in the debate on the Industrial Relations (Amendment) Bill 2009. I congratulate the Minister of State, Deputy Calleary, on his work on the Bill and also on his appointment to the office he now holds. I wish him continued success in everything he does.

The main purpose of the Bill is to strengthen the existing system relating to the making of employment regulation orders, EROs, and registered employment agreements, REAs, and to ensure their continued effective operation. The Bill also provides for the amendment of the definition of "worker" under section 23 of the Industrial Relations Act 1990.

I hope the debate on the Bill will lead to a number of practical outcomes that will be of assistance in meeting the current economic challenges and reflect what is occurring in the marketplace. I do not doubt that the decisions we make on the Bill will have a profound effect across the economy, particularly as certain of the matters with which it deals have an impact on our competitiveness.

Ireland's is a small, open, island economy which must survive by competing in world markets. As everyone is aware, the country faces the most challenging economic crisis in its history and there is a need for us to underpin enterprise and our capacity to trade successfully in world markets if we are to sustain jobs. Ireland is competing in a rapidly changing and uncertain environment and we must ensure we do not undermine our capacity to sustain employment by having unrealistic labour costs.

I had the opportunity to meet many representative bodies in the past couple of months. Each of them brought to my attention their concerns about labour costs and their level of competitiveness as a result of certain regulations in place. One such body, the Irish Small and Medium Enterprises Association, ISME, carried out a survey which found that 45% of its members' firms had been obliged to introduce pay cuts since the beginning of the year. The average size of the reductions was approximately 13%. Mr. Mark Fielding of ISME stated 49% of member firms surveyed had put in place a pay freeze.

I have spoken to people involved in the marketplace who are not members of ISME, each of whom informed me that they had been obliged to conduct root and branch assessments of their costs and engage in the appropriate curtailment thereof. The Minister of State may be interested in hearing that in the recent past I invited a large number of people involved in business to attend a conference I organised. One of the main speakers at the conference stated people must "cut, cut and cut again" in order to survive. Members should acknowledge that this is the clear message from those whose fingers are on the pulse of marketplace developments when they get the opportunity to exchange views with me and others.

A number of Members have mentioned and rightly commended employer and worker representatives on both the hotel and catering joint labour committees, JLCs, on working together in recent months to find a satisfactory method of harmonising the formula for calculating Sunday premia. They have succeeded in reaching agreement on replacing the double time payment as these higher premium rates were having a crippling effect on the viability of services and the prospects for retaining jobs in the hospitality sector. Such sensible and pragmatic action by the social partners in response to changing circumstances makes sense at a time when the economy is losing thousands of jobs each week. We must explore new approaches to operating well trusted mechanisms for establishing minimum wages and conditions to protect workers in vulnerable sectors.

I have listened with interest to the comments of the Minister of State who has mentioned that adjustments must be made, by agreement, to the basic pay rates scheduled to take effect in the retail trade and agriculture sector. It is clearly acknowledged that Ireland has suffered a significant loss of international price competitiveness due to the appreciation of the euro, inflation and wage increases in excess of productivity. Our statutory minimum rates are high by international standards in both absolute and comparative terms. For example, Ireland has the third highest minimum wage in the European Union. If one considers further competitiveness issues, wage bills can constitute approximately 70% of one's carrying costs. Consequently, when competing with our EU partners, having minimum wages that are the third highest in the European Union puts us on the back foot before we even begin. I cannot highlight sufficiently the importance of addressing issues that will encourage and assist the economy to be at the forefront in a real competitive sense.

It is reassuring that the employer and worker representatives in various sectors have responded to this challenge. They recognise what would happen were there blind adherence to the provisions of earlier arrangements made in different economic circumstances. They knew that sticking to an outdated series of regular wage increases would reduce further the ability of exposed lower wage sectors to respond through wage and price adjustments to changing economic circumstances. They knew that failure to adjust to new circumstances could have a detrimental effect in the form of increased unemployment among lower skilled workers. These developments constitute a welcome acknowledgement by the employer and worker representatives in these sectors of some harsh realities and are evidence of their willingness to find practical solutions.

The Bill will further assist that process of adjustment by updating the wage fixing procedures that have been in place for a considerable time, since 1946, through the introduction of the following important changes. It will introduce a set of principles and policies to which regard should be hand in making proposals for employment regulation orders, EROs. It will introduce a set of procedures to be followed when a joint labour committee decides to formulate proposals for an ERO. It will ensure Oireachtas scrutiny of EROs and registered employment agreements, REAs. Moreover, it will introduce the power to amend the EROs within six months in the case of error and will set a fixed term of office for the chairman of a JLC.

Although conscious of time, I wish to touch on a further point, namely, the proposed amendment to introduce an inability to pay mechanism. This is highly important, given the need to find new approaches to modernising the existing machinery and ensuring it fits better alongside new developments such as the national minimum wage. I welcome the Minister of State's confirmation that he intends, following further consultations with the social partners, to frame an amendment to the Bill providing for the inclusion of an inability to pay mechanism in employment regulation orders and registered employment agreements. This is only right and fitting as there is no point in having such mechanisms in place when, at the end of a long process, there is a real inability to pay. Consequently, it is appropriate to have in place a mechanism clearly adopted and appropriately pursued on the basis of inability to pay. At present, an employer in Ireland who is subject to the statutory minimum terms of an ERO or an REA cannot avail, regardless of his or her commercial circumstances, of the possibility of either seeking cost-offsetting measures or pleading inability to pay in a manner consistent with such procedural arrangements as have been developed previously in Ireland by employer and trade union organisations at national level. I understand the Minister of State and his departmental officials have a good handle on this issue and already have entered into consultations with employer and trade union interests regarding the feasibility of devising a suitable inability to pay mechanism which could be adapted to the specific context of EROs and REAs, respectively.

Successive national pay agreements have included inability to pay clauses which have enabled firms experiencing difficult economic conditions to plead inability to pay the terms of the national agreement and to seek to have a dispute over the matters resolved through formal procedures. The mechanisms established under such agreements have featured a number of basic ingredients such as a requirement that genuine efforts be made by the parties at enterprise level to reach agreement. In addition, they include the opportunity for referral, if necessary, of a disagreement to the Labour Relations Commission for conciliation and the opportunity to have the expertise, if necessary, of an independent assessor who I gather is nominated from a panel submitted by the social partners made available to report on the economic, commercial and employment circumstances of the firm. They also include further opportunities for an attempt at conciliation and referral, if necessary, to the Labour Court for a binding determination.

In 1998 the National Minimum Wage Commission recommended that provision be made for an inability to pay clause in the context of the proposed introduction of a national minimum wage. Under section 41 of the National Minimum Wage Act 2000, it is provided that when an employer cannot afford to pay the national minimum wage due to financial difficulty, an application can be made to the Labour Court which can, following an inquiry, exempt the employer from paying the rate for between three months and one year. In other words, we already have experience of dealing with some quite sophisticated safety valve mechanisms that can address the plight of employers in difficulties. These mechanisms have been tried and tested under successive national pay agreements. In addition to having such tried and trusted mechanisms under successive national pay agreements, a particular model of such arrangements already has been incorporated in statute in the case of the National Minimum Wage Act. While the Minister of State, Deputy Calleary, and his Department understand and have a good handle on the matter, we must adapt such a mechanism to the current situation for small and medium-sized enterprises, in particular. It is important to listen to ISME and other representative bodies which make submissions to Oireachtas committees, directly to the Department or through the various mechanisms in place but we should not forget that many small enterprises which are the lifeblood and backbone of some parishes in which they employ one or two people and which may not be affiliated to a national organisation are suffering. This is particularly true of the retail and catering sectors, some of which are covered by employment regulation orders. Construction and electrical contractors are covered by registered employment agreements. Representatives of electrical contractors made certain submissions to the Joint Committee on Enterprise and Small Business, with which I am sure the Minister of State and his officials are familiar. A raft of submissions have been made but there is consistency and continuity in each. I welcome the tones I have heard from the Minister of State and his officials in trying to address and adjust what we recognise as a sensitive issue in terms of costs, wages and survival. I refer to survival for both sides. We must recognise we are in a difficult and challenging time. We must identify the real challenges and opportunities available to ensure we shape our legislative framework to respond appropriately.

Senator Alex White

Although I am not recording a conflict of interest, I come from a background in which I am a legal practitioner specialising in employment and labour law, representing at different times employers, employees, trade unions and, occasionally, employer groups.

This is important amending legislation which, in its broad scope, the Labour Party will support. The Minister of State has indicated that it arises from a commitment made by the Government in the review of Towards 2016 that certain items of legislation would be brought forward to honour agreements made with the social partners in the course of that process.

The Minister of State made reference to the legislation introduced by Seán Lemass in the 1940s to address a particular issue at the time. In many ways, it is still evident and it is not just a matter of the necessity of ensuring competitiveness, to which Senator Callely referred, but also the scourge of very low pay which, I must remind my colleagues, is still a problem in this country. People are paid low rates of pay which does not always meet the statutory requirement of the minimum wage per hour. Abuses continue in the economy in pay and conditions. While we must take account of the importance we attach to competitiveness, particularly of the small businesses to which Senator Callely referred, we cannot lose sight of the necessity that we, as legislators, bear in mind the needs of the most vulnerable in society. I refer, in particular, to those on low pay.

This is where the 1940s legislation comes from, particularly that relating to employment regulation orders which seek to address the situation faced by employees without representation. There is no representation for many working in this country. I must remind my colleagues that many people are afraid to seek representation. Many employers refuse to co-operate, meet or engage with trade unions, the representatives of their employees. When I hear colleagues refer to and criticise "the unions" in the context of the current crisis, they are quick to forget that unions comprise tens of thousands of workers with families who are seeking to make a living. When we talk about the unions responding to the resistance to cuts in public service pay, they are doing nothing more than representing the genuine problems facing people who work in these environments. It is not always a question of low pay, there are many workers, including in the public service, who are on relatively low pay. If we are honest with ourselves in this Chamber and have a debate on what constitutes high, medium and low pay, many would be surprised at the amount of money out of which many are trying to eke a living.

The joint labour committee system, dating back to the 1940s, was intended to address this issue. There have been advances in pay and the protection of terms and conditions. The minimum wage is one of these elements and vitally important. It has changed the landscape to a considerable extent. However, I am glad to see the Government accepts there is still a need for the system of registered employment agreements, as well as the joint labour committee system. I happily acknowledge there is no suggestion from it that this should not be so. This legislation strengthens the system, particularly in ensuring orders made by the Labour Court are taken on by the Minister and made by ministerial order as a matter of course. Undoubtedly, this will fortify orders in respect of challenges that have been made and may be made in the future. It is entirely appropriate that this is the case.

Some still refer to the trade unions and employer groups as social partners. Sometimes I ask myself with whom are they partners. Perhaps they are partners with each other but it looks increasingly clear that there is little partnership between these groups and the Government. It seems there is little or no engagement.

The president of SIPTU made a speech at his party conference some days ago which some thought was a fiery contribution and a call to arms. I suggest people read it. It was robust and vigorous in its defence of his members but I picked out his appeal to the Government to engage with the trade union movement on the current crisis. If there is to be a sense of confidence, a point made by all sides, people will not make sacrifices on pay, taxation and public services if they are excluded from the process. They will not do so if they are characterised as being the problem rather than included in finding a solution. I do not believe there will be any genuine progress or resolution to the current crisis without genuine and serious engagement with the trade union movement. I do not say that in any sense as a threat, and nor should it ever be put as a threat by anybody, whether trade unions or otherwise, but simply as a statement of fact. All one has to do is look at the late 1980s, the last time we were in such a crisis as we are now, when the involvement of the trade union movement was crucial to turning around the economy. It will not happen without them this time either; that is a statement of fact. It is vital that the Government realises that genuine engagement needs to occur rather than an attempt in some quarters — perhaps not directly by Government but by its cheerleaders in the media and elsewhere — to scapegoat and seek to exclude as unrealistic the trade union view.

The Bill is important and the requirement that the orders be made by the Minister and laid before the Houses is good. I want to make a point on the inability to pay. I heard what Senator Callely stated and I understand where he is coming from. The involvement of the employer groups in the determination of rates is already in the system. I am sceptical about the inclusion of an inability to pay clause, not because I do not think there are employers who are unable to pay but because the employer groups will have strengthened involvement in the determination of the rates. Attention should be given to ensuring the employer and trade union groups are involved in the closest possible way in the determination of the rates, taking economic conditions into account. The various categories have been set out in the amendment.

The Minister of State will have to make a strong case to me in favour of the inclusion of an extra layer of inability to pay in addition to that strengthening of the involvement of the employers and trade unions in determining the rate. I know it exists in other legislation but in this situation, where we are discussing a genuine engagement of the two sides in the determination of the rates, there is less of a case for an inability to pay clause. However, I will not close my mind to it. I will see what the Minister of State brings forward by way of an amendment. In general terms, I remind everyone that what we are dealing with is not just numbers, statistics and labour costs in the broad sense of what the term means but individuals who seek to make a decent living for themselves and their families. More often than not, in the particular context we are dealing with here, we are discussing low-paid employees.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Dara Calleary)

I thank the Senators who spoke on this issue today and on the previous occasion for their contributions. We are all agreed that the emphasis of the Bill is to protect workers, in particular the most vulnerable workers, and in doing so to ensure the existing mechanisms for making employment regulation orders and registered employment agreements operate effectively and that they are fit for purpose, especially in the current climate. I acknowledge recognition that the Bill is only part of a suite of measures which the Government will introduce. We were criticised for it at the conference to which Senator Alex White referred. However, this is just a part of the large number of legislative employment rights progressing through the Houses at present.

I will comment on a number of the issues raised during the debate. A number of Senators referred to the very severe competitive pressures operating in certain sectors and in sectors covered by JLCs. I welcome and endorse the comments of Senators on the work that went into every part of the JLCs from employers, trade unions and my predecessor in the role, Deputy Billy Kelleher, in particular with regard to the Sunday premium and the premium in the hospitality sector.

One of the issues to which Senator Alex White referred was the inability to pay. The strong case — in which I genuinely believe — in favour of the inability to pay mechanism is to maintain employment because many employers find the rates agreed at JLCs prohibitive and they are in a temporary position of not being able to pay. By introducing this mechanism, which will be protected and not open to false claims, we may maintain employment. This is the strategy and wish driving my proposals in this area. I look forward to engaging with Senator Alex While on this issue.

The inability to pay mechanism is what gets the most headlines but the Bill contains many other measures. The general definition of the worker has been welcomed across the House. We are very conscious of vulnerable workers and we have established the National Employment Rights Agency, NERA. The Government receives much flak for the work of NERA but it inspects workplaces, particularly workplaces covered by JLCs and registered employment agreements, and in doing so it finds and highlights cases of vulnerable workers. If any Senator knows of any employer mistreating workers, be it in pay, conditions or anything to do with legislation, he or she has the right to contact NERA and engage with it. I ask all Members of both Houses to engage with NERA officials in their day to day work. They will find them to be a superb help.

Senator John Paul Phelan was concerned that we missed an opportunity to address the day-to-day machinations and workings of a JLC. In particular he was concerned about the existence of regionally differentiated JLCs. The key issue on uniform rates is the will of the parties involved in the JLCs. There were two separate JLCs in the catering sector: one for the greater Dublin area and one for the rest of the country. The parties involved in those two agreements have reached agreement to merge them. However, in advance of that amalgamation the parties involved in the two committees decided they would first ensure the implementation of a uniform set of terms and conditions throughout the country before agreeing to the amalgamation. Those rates, including pay rates and the Sunday premium, are now applied in the catering sector throughout the country and it is envisaged the amalgamation of the two committees in the sector will follow. I do not see any need for the Department to interfere in the process. It is under way and is being guided.

I also noted Senator John Paul Phelan's remarks, and remarks made by other Senators, on the chair of the JLC and we are examining the matter. However, I am not convinced that removing the casting vote of the chair will improve prospects for reaching agreement around the table. I am aware of concerns about chairs and we have met many interest groups in recent weeks. We will take those concerns on board on Committee Stage. We must be careful because much of the disagreement on chairs comes from one particular side of the argument and there is a danger that if we move to diminish the role and scope of the chair, the entire process and the JLC system might fail to work and we might be back at square one.

Senator Quinn questioned the objective of the Bill and the system for setting a national minimum wage in addition to the mechanisms for fixing rates. He was concerned that these mechanisms, which as Senator Alex White stated date back to the time when Seán Lemass was Taoiseach, are no longer relevant to today's labour market. While I agree with Senators Quinn, Callely, John Paul Phelan and others who made the point that we must contain employment costs and make ourselves more competitive, we also have to remember the words of Senator Alex White and strike a balance on workers' rights. We are doing much work on competitiveness which will be painful as there will be a reduction in unit labour costs, but with this Bill we are trying to provide a mechanism whereby the reduction can be achieved in an agreed fashion through the JLC system.

We must have measures that protect vulnerable workers in situations where they may be unable to protect themselves or avail of their full entitlements. Workers are most at risk where they work in an environment where the risk of being denied employment rights is high and where workers may not have the capacity or means to protect themselves from that abuse. There are good and poor employers in every sector. The data provided by NERA suggests problems seem to occur more frequently in some sectors covered by the joint labour committees, JLCs. Retail, hotels, restaurants, construction, security and cleaning are particular problem areas. We must keep these mechanisms in place, keeping them under review to ensure vulnerable workers in these areas are protected and poor employers have a fear of sanction if they decide to mess with workers' rights. It is especially important with regard to the timing and frequency of adjustments made to minimum wages and conditions. It is also necessary, as will be achieved in this legislation, to review the way economic and social considerations are calibrated when adjusting minimum wage rates.

Senator Feargal Quinn failed to take account, unlike many of his colleagues, of the adjustments made to statutory minimum wage rates by the relevant JLCs in recent months. Agreements have been reached in the hotel, catering, retail and agricultural JLCs recently. I agree with the majority of Senators who considered the Bill's provisions will help sustain the spirit of realism which has informed efforts at the JLCs.

I welcome the general endorsement of the inability-to-pay mechanism. The Department is having consultations with employer and trade union parties on the best way to facilitate a form of temporary relief when an employer is facing a short-term financial difficulty. The mechanism is a once-off and time limited to allow everyone share the burden in getting a company over the profitability line. It is not a carte blanche and I give Senator Alex White my assurance on that. The mechanism will go some way to balancing the current demands of employers and trade unions in this area.

I thank the Leas-Chathaoirleach, Senator John Carty and other Members for their input. I look forward to Committee Stage when various provisions, particularly the inability-to-pay mechanism, can be examined in finer detail.

Question put.

The Seanad divided: Tá, 35; Níl, 16.