THE GOVERNMENT is to seek reductions in the terms, conditions, and pay rates of a potential cohort of 240,000 workers protected under long-standing sectoral agreements.
The changes, which will result in pay decreases for some workers in rates for overtime and for working anti-social hours, will be introduced in exchange for reversing the €1 cut in the national minimum wage.
The previous minimum wage of €8.63 per hour is to be restored as part of a revised agreement on Ireland’s €67 billion loan package with the bailout “troika” of the International Monetary Fund, the EU Commission and the European Central Bank.
Minister for Enterprise Richard Bruton yesterday confirmed that the restoration of the national minimum wage to its previous level will be included in the revised memorandum of understanding, details of which will be unveiled tomorrow.
Mr Bruton indicated that the troika has approved the Government’s approach of reinstating the minimum wage while instead focusing on “antiquated” arrangements in sectors such as hospitality, agriculture, security, hairdressing and contract cleaning.
He said some of the arrangements on overtime, Sunday working and travel-to-work under the existing joint labour committee (JLC) structures were rigid, inflexible, and archaic.
Joint labour committees, which have union and employer representatives, set pay rates in various sectors which are then made legally binding.
Some 60,000 workers are currently on the national minimum wage and Mr Bruton said the savings achieved by employers by cutting the rate would be very small. By contrast, he said, some four times more people benefited from the JLC structure and reforming it would have a greater and more immediate impact on wage costs.
He said the troika recognised that restoring the higher minimum wage rates while targeting JLC agreements was “a very sensible way to proceed”. Asked about his discussions with the EU-IMF mission, he said it had taken “a very keen interest” in proposals to develop flexibilities in the JLC and statutory wage systems.
“They want to see a vigorous labour market. They recognise, as we do, that there are some archaic measures in place and we need to modernise that,” he said.
Mr Bruton said a lot of employers were worried about the rigidity of this system. “It’s not what they are paying. It’s the rigidity and some of the antiquated requirements of that regime. We can have a much better impact on the cost base of the economy by reforming that system than anything that can be achieved on the minimum wage,” he said.
Asked to give examples, he said: “There are rigid systems in relation to Sunday working and some of the overtime settlements. It also goes into things like travel to work. Some of them are extraordinarily detailed that don’t fit into a modern labour market.”
The memorandum underpinning the €67 billion loan package agreed between the IMF-EU and the previous government last November included an independent review of the JLC structure to be completed by the end of the first quarter.
Last night Mr Bruton told The Irish Times:"We are determined to overhaul and modernise a complex and archaic set of localised or sectoral pay deals which has a much greater impact on competitiveness [than the minimum wage]."
The development came as discussions between the Government and IMF-EU officials on the draft of the revised memorandum continued yesterday.
As well as labour market changes, the draft memorandum will acknowledge the Government’s forthcoming “jobs initiative”.
Separately, the Minister for Public Expenditure and Reform Brendan Howlin said last night that many parts of the Irish public service, as they currently operated, were “not fit-for-purpose.” Mr Howlin praised the commitment of public servants but argued the need for “a leaner, more efficient service”.
