Helpline: Local Jobs Alliance Submission on the Industrial Relations (Amendment) Bill (No 3) 2011.
Mr Chairman and members of the Committee, first of all I would like to thank you for the invitation to the Local Jobs Alliance to make a presentation to you in relation to the Industrial Relations Amendments Bill 2011.
The Local Jobs Alliance is a grouping of organisations representing Irish family owned businesses in the hospitality, retail and services sectors. Our respective organisations represent over 20,000 local entrepreneurs who employ over 200,000 people. We have all been subject to Joint Labour Committee wage setting mechanisms.
All of the businesses that we represent - local shops, hairdressers, pubs, hotels and restaurants - have been badly hit by the economic downturn. For many of the entrepreneurs we represent, it is a major challenge to survive in business. In the current climate it is about survival, retaining jobs and covering basic costs rather than making money. When you consider that consumer spending is down by up to 30% in some sectors, the impact on our members, who rely almost exclusively on business generated in the domestic market, is acute. These family owned businesses have been forced to tightly control all elements of their costs. For most there is a very limited potential of alternative markets in which to generate new business.
If they are going to survive over the next few years and keep the 200,000 people working for them in jobs, then they must control costs, continually adapt their businesses and increase their competitiveness. The people who work in our members’ shops, restaurants, pubs, hotels and hairdressing salons know exactly how challenging these times are – they too are working hard to try and keep the business viable. Our members really value their team. Their employees are a vital part of their businesses – good staff are really valued as they make the difference between success or failure in a local business.
The Local Jobs Alliance believe that it is imperative as an economy that we prioritise the maintenance of local jobs in local communities. New investment by foreign companies is, of course, of critical importance, but it the jobs in the enterprises that our members represent that are the back bone of local employment in communities throughout the country. In many places our members are the only employers providing local jobs.
In many instances our members are the people who give people their first job. We also provide vital local part time work.
And our members are good employers. They are honourable people who work with their employees on a daily basis and want to keep their staff in jobs and keep their business going. Unfortunately the last four years have been a traumatic time and each of us in our representative organisations has dealt with distressed members who are fighting for the survival of their business. Bear in mind when you are a self employed entrepreneur and your business fails, the protections that are available for you and your family are few and far between.
It has long been our contention that the JLC structure which was established back in the 1940s, which has involved the imposition of a higher starting hourly rate for people employed in our member’s businesses, is unfair, outdated and unnecessary. It imposes additional costs on our members by compelling them, with the threat of prosecution, to pay a rate of pay higher than the national minimum wage to employees working for them. It has been an erratic system that fails to distinguish between different types of outlets involved in the same sort of business.
Over the last number of years we have seen considerable developments and evolution in the retail, hospitality and catering sectors. The law has not kept pace with these changes and instead has seemed content to categorise different businesses and the employees working in those businesses by reference to how commerce was conducted in the 1940’s and 1950’s. For example shops are not treated in an entirely arbitrary way but depending on whether they sell certain limited products, such as cold pressed ham.
The distinctions drawn have been on the basis of geographical difference. If we are serious about maintaining jobs in these difficult and distressed sectors, we must aggressively tackle any inflexible and arbitrary conditions which impose costs on business. They were not justified in normal times and they are certainly not justified in times of acute distress.
It is also important to inject some balance into this debate. The impression is being created that these controls are required to protect vulnerable employees from unscrupulous employers. That is to polarize consideration of the question and to expect policy makers to make decisions solely on the basis of emotive and often unproven criteria. In effect the JLC regime has been in abeyance since July 2011, when the High Court ruled that aspects of it were unconstitutional. The impression was given by supporters of the JLC system that the roof would fall in if the system was found unconstitutional. However this has not happened. The vast majority of employers have not cut the pay rates of existing staff. In fact to the very largest extent possible, employers have sought to honour existing terms of conditions. There have been some instances where employers in businesses facing really difficult times have had to sit down with their employees and with their consent have agreed lower hourly pay rates. This option would not have been open to them had the JLC structure been maintained. In addition there is also evidence that jobs have been created since the JLC structure was placed in abeyance. RGDATA has carried out a survey of over 500 members and 60% have employed new staff members since last July with the national minimum wage as their starting salary.
We note that the Minister has committed to introducing legislation to reform the JLC structure. We are concerned that much of this legislation merely reinstates the discredited regime which the High Court ruled to be unconstitutional. In light of the difficulties that our members face we believe that this is regrettable and avoidable. It is totally counter productive for the Government to advance any legislative measure which has as its effect, the reduction in employment or the removal of any incentive to create new jobs. Re imposing the JLC regime which has as its starting point, a higher earning rate than the national minimum wage will have such an effect.
If the Government is to proceed with this legislation, as it seems intent on doing, we have a number of suggestions that we believe should be included in the Bill to try and address some of the difficulties that arose with the JLC structure previously. The suggestions we are proposing will allow the new Bill to operate without damaging the jobs and businesses of the employers that we represent.
The key recommendation that we would make is that in the context of any new JLCs being established, the basic rate which the JLC should assess at the outset of its considerations should be the national minimum wage. It should not be a given that where a JLC is established, the starting point for considerations of rates and pay in that sector is a rate in excess of the national minimum wage. Any increased rate in addition to the national minimum wage must be objectively justified and sustained rather than being imposed by foisting the old discredited system on distressed businesses at this stage.
We also believe that the JLC should focus solely on issues relating to pay and should not have any remit over other conditions of employment. These are covered by other legislation which all employers must comply with and justifiably so. They also need to address some of the penalties that are imposed on employers who fail to pay the JLC rates and to align them with other employment legislation in the Payment of Wages Act 1991.
We will submit a list of detailed amendments to the Committee for consideration in the context of the select committee stage.
Given the distress that is in the economy at the moment, and the imperative to maintain and create new employment, I hope that this committee, and indeed the Minister, will recognise that the vast majority of employers who have been impacted by the JLC system in the past are genuine local businesspeople who have no interest in exploiting staff, but who wish to retain existing employment and struggle hard to keep their businesses alive. These employers require that any new JLC system should have as its focus the extremely difficult economic conditions that are out there at present. The JLC structure must not work to inflate wages at a time that it cannot be afforded or to impose new costs and obligations on employers which are either not necessary, or have the effect of reducing the viability of businesses, many of which are teetering on the brink of survival at present.
I hope that this Committee can focus on some of these people and ensure that there is balanced consideration which has regard for the 20,000 businesses that we represent and the 200,000 people that work for them in local jobs in towns, villages and communities all over the country. We would be happy to answer any questions.
Tara Buckley on behalf of the Local Jobs Alliance
RGDATA, Retail Grocers, Dairy & Allied Trades’ Association,
Tara Buckley
Director General
Vintners’ Federation of Ireland
Padraig Cribben
Chief Executive
Irish Hotels Federation
Tim Fenn
Chief Executive
Restaurants Association of Ireland
Adrian Cummins
Chief Executive
Convenience Stores & Newsagents Association
Vincent Jennings
Chief Executive
Licensed Vintners’ Association
Donal O’Keefe
Chief Executive
Irish Hairdressers Federation
Duncan Kenna
