Monday, 2nd March 2009

Sunday Double Pay No Longer Sustainable
Wage Costs Pose Threat to Hotel Services on Sunday, say Hoteliers

The Irish Hotels Federation (IHF) maintains that its members are being forced to call time on hotel services on Sundays given the exorbitant hourly rates imposed under the Joint Labour Committee (JLC) system. Addressing over 200 delegates at the IHF’s 71st Annual Conference in Killarney, Matthew Ryan, President, IHF, states that, given the major economic challenges facing the hotel sector, it is essential to control wage costs in an effort to improve competitiveness within the industry and safeguard existing jobs.

Mr Ryan stats, “Current wage costs of over €20 an hour for Sunday working are unjustified and completely out of step with other countries. Hoteliers have now been forced to curtail services on Sunday as a result of the statutory requirement under the archaic JLC system which was originally established in 1946 and requires hotels operating outside of Dublin and Cork cities and Dun Laoghaire to pay double time for work performed on Sundays.”

The Federation states that the JLC system was established to protect employees at a time when there was an absence of employment protection and minimum wage legislation which is now in place.  It maintains that the JLCs should now be modernised and amended to take account of current challenges or leave the statutory regulation of wages and conditions of employment to the Government which would then be universally applicable to all sectors in the state

Mr Ryan said that, in order to improve competitiveness and safeguard existing jobs, all costs over which the sector has control must be tackled and pay rates are the biggest single cost outlay. The current Sunday working rates are a barrier to employment as hotels have no choice but to reduce and, in many cases, eliminate Sunday services due to excessive wage bills, and this leads to a diminished customer experience.

“The hotel business is one of the most labour intensive industries in the country and, over the last thirteen years, labour costs as a percentage of turnover have grown from 28.5% in 1995 to almost 50% in 2008. At €8.65 per hour, we also have the second highest minimum wage in Europe, and our cost competitiveness is completely eroded when you combine this with Sunday rates of pay at over €20.16 per hour in JLC areas. Irish hoteliers are committed to paying a fair wage but the Sunday rates are, totally unreasonable and are now a barrier to employment in the sector.”

“There is no doubt that a more reasonable wage arrangement would result in increased employment opportunities on Sundays. Hotels simply can not bear these high rates in the current market. It is jeopardising the viability of hotels which can not sustain this level of cost and find themselves curtailing services on a Sunday, with harmful knock-on effects to overall customer experience. The Sunday lunch in the local hotel could become a thing of the past,” says Matthew Ryan.

The Government increased the National Minimum Wage to €8.65 per hour in July 2007 (a 13% increase from the rate set in April 2005), lumbering Ireland with the second highest minimum wage in the EU after Luxembourg which has the highest rate at €9.47.  In an increasingly competitive global market, Ireland’s wage costs greatly exceed those of competing countries such as the UK (€6.44) and Spain and Portugal, where the national minimum wage rates are €4.20 and €3.02 per hour, respectively.

 “The hotel industry in Ireland employs almost 60,000 people. If we are to sustain those jobs, the Sunday double time wage rate must be reduced to a figure which is reasonable. In saying that I am not condoning the exploiting of staff, but we have a raft of employee protection legislation including The National Minimum Wage Act, The Organisation of Working Time Act, Minimum Notice and Terms of Employment Act etc which should be the mechanisms to legislate for employee protection in all employments,” concludes Mr Ryan. 

Nationwide, hotels and guesthouses are experiencing growing price pressure with room rates down 5% in 2009 according to the Consumer Price Index. The sector is also suffering from falling prices together with reducing hotel occupancy rates, which are at their lowest levels since 1994 occupancy rates have fallen from 64% in 2007 to 58% in 2008 with bednights for the North American, European and British markets down by 23%, 15% and 7% respectively. The IHF maintains that the current wage costs are dangerously out of kilter with today’s economic reality and are perilous to maintaining current employment levels within the hotel sector.

FOR INFORMATION:
Siobhan Molloy / Eoin Quinn              Press office:  064 66 38443.
Weber Shandwick                              Dublin office:  01 6760168
                                                            Mobile: 086 817 5066 / 087 233 2191

* The JLC system was established under the Industrial Relations Act 1946, but has its origins in the Trade Board Act 1909.

** The Irish Hotels Federation represents almost 1,000 hotels and guesthouses throughout the country, which in turn employ 58,500 people.