Finally some movement on retail wage issue

Minister for Jobs, Enterprise and Innovation, Richard Bruton
Minister for Jobs, Enterprise and Innovation, Richard Bruton

With Minister Richard Bruton stating he is committed to “radical reform” of the JLC system, Fionnuala Carolan outlines the likely implications for the retail trade



21 June 2011

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Following months of speculation about the destiny of the Joint Labour Committee pay agreements, recommendations from the government have been released in the report of the Independent Review of Employment Regulation Orders (EROs) and Registered Employment Agreement Wage Setting Mechanisms which was published by Minister for Jobs, Enterprise and Innovation, Richard Bruton the beginning of this month.

The report sets out a time-limit of the end of June for a government decision on the issue and Minister Bruton said he was committed to “radical reform” of the Joint Labour Committee system.

The report’s overall finding is that the basic framework of the current JLC/REA regulatory system requires an overhaul to make it fairer and more responsive to changing economic circumstances and labour market conditions which is consistent with the commitment in the Programme for Government.

While there is little chance of the abolition of the wage agreements entirely, it looks like there will be some significant changes made. New employees will be the most affected by proposals to overhaul wage-setting mechanisms as existing employees are protected by their contracts of employment. The most likely outcome at this stage is a change to the Sunday premium and overtime payments for new workers.

The report has proposed that there is a case for allowing employers under pressure to derogate from a JLC provided it does not distort competition in the sector. It is yet to be seen how it can be qualified how ‘under pressure’ an employer needs to be before this is permitted.

The report also recommends that the JLC system should only operate where collective bargaining does not take place, another grey area that would need to be clarified.

On release of the report Bruton said that wage reforms were needed to get people back to work. “In reality, the proposals are likely to have the greatest impact on new employees, and thereby create an incentive for employers to hire,” he said.
Yet the report, from the independent review drawn up by the Labour Court chairman Kevin Duffy and UCD economist Frank Walsh said that lowering basic JLC rates to the level of the minimum wage was unlikely to have a substantial impact on employment.

Any changes in the JLCs angers the unions who see it as an attack on the lowest paid in society.

David Begg, general secretary of the Irish Congress of Trade Unions described it as throwing existing staff to the wolves due to the recommendations for lower rates of pay and less overtime for new staff. Mr Begg said that these measures would encourage employers to replace existing staff.

Begg has a right to be concerned for the lowest paid in society but the fact of the matter is that in the retail industry (as is probably also the case in other industries) employers place huge value on their long term staff and I sincerely doubt that any retailer would see replacing old, experienced staff with new cheaper staff as a viable option. Every retailer I meet tells of how his or her staff are the essence of the business and nearly all boast of the length of time staff members have been with them. Loyal, dedicated staff are key to running a successful business.

While Bruton describes the proposed changes as “radical”, in reality they are far from this. These recommendations to reduce overtime and premium rates for new employees will, if implemented, arm employers with the means to employ extra part-time staff and staff to cover holiday periods at a more reasonable rate but it won’t solve the problem that still exists. Bruton is delusional if he thinks that these changes will sort out unemployment, but it is a start.

We still have the second highest minimum wage rate in Europe and the JLC rates are approximately 25% higher than this again and although no one wants to see the lowest paid in society get hit once again, we do need to do something to convince the rest of the world that we are making strides to become more competitive and trying to keep our costs in line with the state of the economy.  

On a separate issue Brian Skelly (page 18) asks why food prices rise and fall and outlines what we can expect in the coming months. Retailers need to brace themselves as prices are due to rise this summer because of unusually low rainfall across Europe which has forced the price of basic commodities such as grain and wheat up. Pepsi and Coca Cola have already announced that prices of these products will increase to cover the costs of rising commodity prices. Customers are so sensitive to price hikes in this climate that retailers need to be able to explain that these rising costs are out of their hands. Trying to provide a good value offering for your customers is going to become a lot more difficult in the coming months but everyone is going to be subject to the same pain.

And finally, in this issue we have the Centra Store of the Year 2011 supplement featuring the top ten Centra stores in the country and interviews with the top retailers. Indulge your curiosity on page 29.

Fionnuala Carolan



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