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Tuesday, 5th March 2013
GOVERNMENT CAVING IN TO UNIONS ON WAGE SETTING MECHANISM – HOTELS SAY
Job Creation Put at Risk in Attempt to Resurrect Outdated Joint Labour Committee (JLC) System
· Reintroduction of JLCs hinders ability to take on additional staff say 91% of hoteliers
· Proposal runs contrary to Government’s stated employment creation agenda
· Coherent approach to job creation in hotels sector required
Attempts to reintroduce the Joint Labour Committee (JLC) system are little more than pandering to trade unions at the expense of job creation in the hotels sector, over 400 delegates at the Irish Hotels Federation’s 75th Annual Conference heard today. Speaking at the conference in Killarney, IHF President Michael Vaughan called for the JLC system to be abolished and accused factions within the Government of having blatantly undermined initiatives to stimulate employment in the hotels sector by caving into short-sighted union interests.
In a survey carried out in advance of the conference, some 9 out of 10 ( 91%) of hoteliers stated that the increased burden and cost of meeting employment regulations under the JLC system would hinder their ability to take on additional staff this year. This comes at a time when room rates in Irish hotels are among the lowest in Western Europe while wage costs for new recruits are the fourth highest in the EU.
The Labour Court is currently carrying out a review of the JLC for wage setting within the labour intensive hotels sector as set part of its remit under legislation introduced by the Government last year. The legislation which aimed to resuscitate the system imposes anticompetitive wage demands and excessive red tape on businesses.
“JLCs impose an additional layer on employers,” says Mr Vaughan. “We have little confidence in a review that has been commissioned by the LRC - one of the key architects of the JLC system since 1946. We believe job creation in our sector is essentially being jeopardised as part of calculated and short-sighted attempts to appease the unions,” says Mr Vaughan.
“By reintroducing counterproductive inefficiencies and rigidities in the labour market, the system goes against everything the Government’s national employment agenda is trying achieve. It shows their words and actions are clearly not aligned when it comes to tourism – one of the country’s largest indigenous industries.”
Mr Vaughan states that the focus of any truly independent review of a JLC system should, particularly in the current economic environment support and foster job creation particularly in sectors such as hotels which are labour intensive and where excessive regulations/labour costs are barriers to employment. If that focus was maintained we have little doubt as to the outcome of an independent Review.
“The history of much of the current industrial relations and employment regulation process has demonstrated a bias towards increasing the cost of employment for employers and thereby contributing to the erosion of the competitiveness of Ireland. The fact that Ireland has the fourth
highest national minimum wage rate in the EU is in itself a major anti-competitive factor,” continues Michael Vaughan.
Mr Vaughan states that JLCs are out of touch with the realities confronting tourism businesses and undermines job creation in hotels and guesthouses. He says: “On one hand we have supportive tourism initiatives such as a reduced VAT rate whilst on the other hand we have additional costs imposed on tourism businesses in the form of JLCs. This barrier to job creation places an unjustifiable burden on hotels – the very businesses that should be the backbone of any future recovery and growth in employment.”
“We need the Government to be more pro-business and remove all barriers to growth and job creation. As it stands, payroll is already the largest element of costs within the hotels sector, accounting for in excess of 40% relative to turnover following significant increases over the last decade. This puts hotels and guesthouses at a serious competitive disadvantage compared to our biggest competitors such as Northern Ireland and Britain, where average payroll costs are significantly lower.”
Mr Vaughan states: “We need an environment that safeguards the 54,000 employees in hotels and guesthouses but most importantly allows for further growth in employment. Businesses can no longer be shackled with an obsolete system which imposes excessive wage demands and complex compliance requirements. JLCs make no sense for our country and are neither appropriate nor fit for purpose in a modern competitive economy. They have lost all relevance with the introduction of the National Minimum Wage Act and over 40 other separate pieces of extensive employment legislation including the Working Time Directive.”
The IHF maintains that radical changes to Ireland’s economic and regulatory environment over the past century have made the Joint Labour Committee (JLC) system obsolete, particularly in light of the
National Minimum Wage Act 2000, which has provided Ireland with one of the highest gross minimum wage rates in Europe. The IHF welcomed the High Court decision in 2011 which abolished the JLC system of setting statutory minimum wages at levels higher than the National Minimum Wage.
However, the Government through its enactment of the Industrial Relations (Amendment) Act 2012, took an anti-business and anti-competitiveness action which effectively facilitates the reintroduction of this archaic and widely discredited system. The Federation is seeking the abolition of the JLC system and for all employment law to be created solely by legislation introduced by the Oireachtas alone and to be applicable to all employments. The IHF is strongly opposed to employment law being created by organisations such as the JLC or the Labour Court.
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