Move to cut wages of 300,000 low-paid workers
THE wages of more than 300,000 low-paid workers are under threat after the Government announced a review of minimum pay rates across the economy.
The contracts of both existing workers and new employees will be looked at by the review.
Unions fear this could mean legally binding pay rates in industries such as retail, catering, hairdressing, construction, and agriculture will be abolished.
Employers say existing rates of pay are "unaffordable" and leading to job losses at struggling firms.
The Government agreed to a review of these pay rates in its €85bn bailout deal with the IMF before Christmas. It committed to an independent review of the process involving employers and unions that decides the rates, along with a €1-an-hour cut in the national minimum wage that came into force last week.
The Government last night confirmed the review would be chaired by UCD economics lecturer Dr Frank Walsh and Labour Court chairman Kevin Duffy, and would be finished in April. The review's terms of reference say "it would be desirable" that the contracts of existing workers and not just new employees be "addressed".
This means the minimum pay rates and employment conditions of all workers covered by the wage-setting mechanisms could be at risk. It is not yet known how the contractual rights of existing employees could be changed without their agreement.
The wage rates under review are set out in Registered Employment Agreements (REAs) and Employment Regulation Orders (EROs), which are jointly agreed by unions and employer representatives and rubberstamped by the Labour Court.
EROs cover workers in lower-paid sectors, including catering, contract cleaning, hairdressing, hotels, law clerks and the retail and security industries. They are given force of law by the Labour Court after joint labour committees -- made up of union and employer representatives -- agree pay and conditions.
However, employers say these pay rates are often "forced" on them because the committee chair has a deciding vote.
REAs are drawn up after employers and workers in any sector or individual firm agree minimum rates of pay and conditions and then register them with the Labour Court. REAs covering the construction and electrical sector apply to the largest number of workers.
Employers believe procedures around REAs are too rigid for them to get agreement on pay cuts in the event of an economic crisis.
Employer groups welcomed the review and called for the "outdated" wage-fixing systems to be abandoned.
IBEC, whose members employ three-quarters of the private sector workforce, said many of the pay rates were too high by international standards.
Chambers Ireland, the Irish Small and Medium Enterprises Association and the Small Firms Association called for the review to take place as quickly as possible.
Grocers' representative group, RGDATA, said the mandatory wage in its sector was nearly €2 an hour higher than the national minimum wage and its members faced an "unjustified" pay rise in June.
It said grocery trade employers feared prosecution if they did not pay the "inflated" statutory pay rates.
Meanwhile, union umbrella body, ICTU, said the review was an opportunity for the incoming government to end the outgoing administration's "attack on incomes". It believes the review will put the government's wage cutting agenda "to bed" by rejecting the employers' demands.
"The attack on the REAs and EROs is part of that campaign and a clear line can be drawn between the cuts in public sector salaries, welfare rates and the minimum wage and the attempts to demolish key wage setting mechanisms such as the REAs and EROs," said general secretary David Begg.
"The review now provides an opportunity to end this policy and start focusing on jobs."
He questioned the role of EU institutions in agreeing to the review and pointed out that EU law forbids them from any involvement in setting wages in members states.