Thursday, 30th November 2006

HOTELS CHIEF CALLS ON MINISTER TO MODIFY WAGE INCREASES 

The Irish Hotels Federation (IHF) has expressed alarm at the size of the increase in the National Minimum Wage rate as recommended by the Labour Court. It is calling on Tony Killeen T.D., Minister for State at Dept of Enterprise, Trade and Employment not to accept recommendations to increase it by an excessive 13%, but to vary increases in line with the National Agreement ‘Towards 2016’. It stresses that its implementation would have a massive negative impact on competitiveness in the hospitality sector where payroll costs have substantial increases in recent years. The IHF maintains that implementation of the recommended €8.65 an hour rate would put Ireland 2nd only to Luxembourg as having the highest minimum wage rate in the EU.  In a competitive international tourism environment, Ireland’s wage costs would compete with national minimum wage rates of €3.12 in Spain, €2.23 in Portugal and the equivalent of €7.90 in the UK.

The IHF states that the recommendation undermines the National Agreement ‘Towards 2016’ and that the Labour Court in arriving at its decision to recommend this increase did not give adequate regard or due diligence to its statutory duty to take into account the impact this decision could have on national competitiveness and inflation in the economy.

According to John Power, Chief Executive, the hospitality sector is particularly vulnerable to wage increases where payroll costs represent a much larger percentage of turnover than other sectors. Currently payroll costs in hotels are at least 37% of actual turnover.  Implementation of this increase will push wage rates to over 40% of turnover in hotels or 80% of the gross value added in the sector.  

“This decision is particularly incredulous in that it does not follow the increases totalling 10.5% phased over 27 months already agreed between the Social partners in the “Towards 2016”  National Understanding and superimposes increases of 13% over an 18 month period,” says John Power.

The IHF calls on the Minister to seriously take into account the impact which the proposed rate may have on national competitiveness, particularly in labour intensive industries and to vary the recommendation of the Labour Court to bring it into line with the increases already negotiated as part of the National Agreement “Towards 2016”

“As an industry we have legitimate concerns and these should be taken into account. It beggars belief that huge efforts are made to secure national wage agreements and then these are thrown to one side by a statutory body,” concluded John Power.

ENDS

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