Retailers back Bruton's call to cut wage rates
Plan could create 7,000 jobs -- but minister faces uphill battle with Labour backbenchers
Published 29/05/2011 | 05:00
Richard Bruton's proposal to cut the wages of the lower-paid could create 7,000 new jobs in retail, it has been claimed -- but the Fine Gael minister appears to face an uphill battle in pushing through the reforms he wants.
Labour TDs are incensed at what they see as a brutal attack on the lower-paid. They were only mollified by the Taoiseach's comment that Mr Bruton was pursuing a personal agenda -- although Mr Kenny later played down his rebuke in his Late Late Show interview on Friday night
But the representative body of retailers said the reforms were essential in securing existing jobs. Retail sales slumped again in April and the industry says it has already lost 40,000 jobs since the downturn began, with another 30,000 under threat.
Many retailers have had to cut their workforces and scale back on opening hours because of the high wage costs on Sundays, which they are obliged to pay under the current legislation.
Welcoming the publication of proposals to reform the Joint Labour Committee (JLC) wage-setting mechanisms, Retail Excellence Ireland has said that these reforms are essential.
David Fitzsimons, chief executive of Retail Excellence Ireland, said: "The reforms being proposed by the minister are the right ones for job retention and creation.
"There is a real jobs dividend on offer if these reforms are pushed through. Retail Excellence Ireland members have confirmed that an average of five new positions per company afflicted by the JLCs could be created and 24 current positions secured.
"Overall, this means that 7,000 new jobs could be created in the retail industry if significant JLC reforms were fully implemented.
"The minister himself acknowledges that many Irish businesses are unable to compete with businesses in countries like the UK, as comparable wages are up to 30 per cent lower than in Ireland.
"Similarly, rates of pay in many of the areas covered by the JLCs have increased much faster than the national minimum wage, which is clearly unsustainable."
Speaking in Brussels yesterday, Minister for Communications Pat Rabbitte said people should be very careful about tampering with the pay of low-paid workers.
He said the Cabinet gave Mr Bruton approval to publish the Duffy-Walsh report on proposed reforms -- but emphasised that the only decision was to release the report.
Ministers awaited a formal proposal from Mr Bruton at the end of a short consultation with employers and unions, he added.
Mr Rabbitte said that Mr Bruton had left his colleagues in Government in no doubt that he had views on the matter himself and would guide the discussion.
Newly elected Labour deputies Michael McCarthy, Colm Keaveney, Robert Dowds, Sean Kenny, Derek Nolan and Kevin Humphreys issued statements criticising Mr Bruton's proposals.
Mr Humphreys said Mr Bruton should be concentrating on cutting the wages of lawyers and doctors instead.
"If Minister Bruton is genuinely concerned about making Ireland more competitive by cutting fees and salaries, he really should start at the top," the Dublin South-East TD said.
Mr Dowds accused Mr Bruton of a "drive to undermine" the wages of the lower-paid.
But retailers, in particular, say reform is vital.
"Joint Labour Committees are clearly not working when they have, as recently as January, resulted in some of our members' retail businesses being forced to increase their wage rates at a time when retail sales are still in freefall.
"We are now in the 39th month of consecutive decline in retail sales," Dave Fitzsimons said.
The volume of retail sales fell by 3.9 per cent in April, compared with the same month last year, and they have fallen by 0.8 per cent since March.
When the motor trade is excluded -- it can give a somewhat misleading impression because of the success of the car-scrappage scheme -- the difference in the volume of retail sales between April 2010 and April 2011 rises to five per cent.
Only non-specialised stores, departments stores and clothing, footwear and textiles showed any increase, compared with April 2010.
Furniture and lighting retailers had a year-on-year decrease of 16.2 per cent, while fuel sales were down 11.9 per cent, compared with figures for April 2010.
Bar sales, while up 1.5 per cent on the figure for March of this year, are down 6pc on the April 2010 figure.
According to Dermot O'Leary of Goodbody Stockbrokers, the data compiled by the Central Statistics Office continues to point to an exceptionally difficult consumer environment in Ireland.
He said the increase in fuel prices had had a major effect, and that ahead of the end of the car-scrappage scheme, there were already signs of weakness in motor sales.
Mr O'Leary added that while recent events in Ireland, including the visit of Queen Elizabeth and US President Barack Obama, may have a short-term positive impact on consumer confidence, there is little help coming from underlying drivers of consumer spending for the foreseeable future.