Labour and Siptu surrender on Low Pay

national | worker & community struggles and protests | opinion/analysis Friday July 29, 2011 20:30 by Paddy Healy - ULA paddy.healy at eircom dot net

Following the surrender of the Labour Party in Cabinet on JLCs, SIPTU has described the proposals as “relatively positive” on RTE Television News, July 28 and has given the government plan “a cautious welcome” (Martin Wall, Irish Times July 29).

This is a dark day for Irelands biggest union which was built by Larkin and Connolly

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Mandate Trade Union and Unite the Union have roundly condemned the Government proposals to cut the low pay of over 200,000 employees.

The proposals will give rise to reduction of JLC rates generally,  elimination of Sunday premium, and allow employers to claim inability to pay.

“The trade union Unite said last night it would not rule out industrial action in protest at the Government’s planned measures. The plan was also strongly criticised by Mandate, the union representing retail workers.” Martin Wall Irish Times, July 29

But following the surrender of the Labour Party in Cabinet, SIPTU has described the proposals as “relatively positive” on RTE Television News, July 28 and has given the government plan “a cautious welcome” (Martin Wall, Irish Times July 29).

This is a dark day for Irelands biggest union which was built by Larkin and Connolly

The trade union affiliation of the new government appointees to the board of Solas (replacing Fás) will  be of considerable interest

“This is devastating for 200,000 workers- following increases in gas prices, mortgages, food prices, thousands will be driven over the edge- majority are women earning no more than 9.50 an hour trying to put food on table-this is not to create jobs but to lower pay and conditions-it won’t create a single extra job. When Margaret Thatcher dismantled the wage councils in England ,it did not create one extra job-the research shows this despite the ministers claims”

Analysis

The EU-IMF deal  commits the Irish Government to a “review of wage setting mechanisms”. There may have been additional secret assurances given  by the previous government but the EU-IMF Deal does not specify any particular measure.

Bruton had made his proposals before the JLC system was struck down by the courts on constitutional grounds. The changes to pay rates, conditions of service and terms of reference in the proposals  have nothing to do with the decision of the court. The proposals for these changes pre-date the courts decision. There are changes in  procedures which are genuinely required in the light of the courts decision. In the wake of the court decision there are no legally enforceable Employment Regulation Orders (ERO) in existence in the state. The process of establishing new constitutional EROs will have to commence from scratch. This will take several months during which no legally binding  EROs will exist.

If the Fine Gael/Labour Government were interested in protecting the 200,000 employees covered by the original EROs at the earliest possible date, they would have introduced the procedural measures contained in the proposals published yesterday before the Dail was adjourned for the summer one week ago or alternatively, they could have kept the Dail in session to deal with the matter.

Government “spin” to the effect that the measures were announced yesterday to protect workers in the light of the court decision is entirely false and misleading.

The way that the matter has been handled ensures that workers will remain unprotected by EROs for several months  and when new EROs are produced their provisions will be far inferior for workers to the ones that have been struck down by the courts.

Job Creation?

The Minister and the employer body IBEC continually argue that pay and conditions under EROs must be reduced in order to create jobs. There is no evidence for this. Indeed,  the Duffy/Walsh Report to the Minister for Enterprise, Employment and Innovation  concludes inter alia : “We have concluded that lowering the basic JLC rates to the level of the minimum wage rate is unlikely to have a substantial effect on employment.” and “ we conclude that it is not accurate to suggest that the body of primary employment rights legislation currently in force adequately covers matters dealt with by EROs and REAs.”  According to the OECD, Ireland suffers from some of the highest levels of low‐pay. Over 21% of full‐time employees are ‘low‐paid, compared to a Eurozone average of 14.7% and  EU Commission data shows that labour costs (include wages and employers’ contributions) in the Food & Accommodation sector in Ireland are 6% below the EU-15 average.

Despite the fact that the above information has been contained in several statements by trade unions and ULA TDs , Minister Bruton was allowed to repeatedly assert that the measures would to create jobs in interviews on Drivetime and RTE News without the contrary evidence being put to him. IBEC spokespeople have also been allowed on all media to claim that 40% of restaurants do not open on Sunday “due to the Sunday premium”. Of course many restaurants have always remained closed on Sunday because their trade depends on demand from locally employed people who do not work on Sundays. Restaurant closures, limited opening hours and increased Sunday closing is due to the reduction in demand caused by increased unemployment and income reductions due to recent budgets. The IBEC claim is a gross abuse of dubious statistics based on surveys of restaurant owners. “They would say that, wouldn’t they?”

Key Measures

The Minister asserts that new JLC rates will be lower. This is because the terms of reference for the wage setting process have been changed to the disadvantage of the worker side. “These include competitiveness factors, average hourly rates set in comparable sectors in Ireland’s main trading partners as well as employment and unemployment rates” Martin Wall, Irish Times,July 29. For example, the employer side will now be able to argue that pay rates should be lowered due to the extent of unemployment. This is a classic use of unemployment by employers to drive down wages. It has no justification except capitalist greed.  It will now be supported by statutory terms of reference agreed by the Labour Party.

The Minister claims that these new lower rates will not affect existing workers who are protected by the terms of their current employment contracts. The minister knows well that existing employees can be pressurised in many ways to agree to reductions in existing pay rates if these are not legally binding. That is a major reason why legally binding JLC rates exist. Employers have many ways of discriminating in favour of new cheaper workers (eg allocation of overtime, denial of promotion, assignment to easier or more pleasant job etc). In addition, a new businesses paying lower rates will be able to undermine existing businesses paying higher rates. This is also the case in relation to the new provision of allowing businesses to claim inability to pay. An employer being undermined by competitors can then pressurise employees to accept the lower legal rate or face closure and unemployment. The original JLC system was designed to prevent this “race to the bottom” in competing businesses dependent on finite demand.

The new JLCs will be precluded from setting a Sunday premium. The suggestion that the provisions of The Working Time Act is an adequate replacement to protect workers is completely false.  Under that Act the employer can simply give another day off instead. This effectively means that staff can be made to work at the flat rate. Sunday premium has been simply abolished.