While the minimum wage falls, JLC rates remain

ShelfLife editor Fionnuala Carolan
ShelfLife editor Fionnuala Carolan

Fionnuala Carolan considers the government's illogical strategy in reducing the minimum wage, yet still allowing JLC rate hikes to proceed in January and June



15 December 2010

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It’s been a strange month but then I suppose it’s a fitting end to an equally strange year. While it is laughable that we were assured by the government this time last year that the worst was over, things have managed to get progressively worse as the year has dragged on.

The past month has seen the IMF descend on the country and burden us with a bailout package we can’t afford to pay back, we’ve encountered some of the most severe weather many of us have ever seen at this most crucial time of the year for the retail industry and we’ve experienced a truly harsh budget.

One of the most significant developments of the budget was the introduction of the Financial Emergency Measures Bill which reduced the minimum wage by one euro to €7.65 an hour. This means we no longer have the second highest minimum wage in Europe. We now sit in fifth place, which is  slightly more respectable.

The minimum wage was considered far too high for far too long and it had become a huge burden to employers. Although the new rate will seem harsh to those on the minimum wage it is still over 8% higher than the UK rate of £5.93 (€7.06). Most employees would prefer to have a job at the minimum wage than not to have one at all, a likely scenario as employers are forced to cut staff numbers due to unsustainable wage bills.

We have an unemployment rate of 13.6% (438,800 people now unemployed) so we needed to do something to stem the numbers of young people leaving these shores to seek employment abroad.

So you would imagine that employers of small businesses would be delighted by this turn of events. Well unfortunately not all of them can celebrate. In the retail, hospitality and cleaning sectors, the decrease in the minimum wage means diddly squat due to the continual enforcement of the Joint Labour Committee pay rates.

Now there is an even greater divide between minimum rates of pay and that of those in the industries with JLC agreements in place ensuring that employers in these sectors are at a distinct disadvantage to other sectors. There is now an 18% difference between the new minimum wage and the JLC rates for the retail sector. What’s even worse is that the proposed JLC increase set for January is still due to go ahead.

From 1 January 2011 employers can expect to pay an extra 1.25% on already inflated wages and it is proposed that from 1 June 2011 they will increase it by yet another 1.25%.

Our overall rates of pay in Ireland have long been out of sync with the rest of Europe and considering the state of our economy something needed to be done to rectify this. Even with the drop in the minimum wage it still seems wrong to have the fifth highest minimum wage in Europe.

We have to be practical and make this country a viable place to do business again but surely the same rules should apply for all employers. IBEC has said that regaining competitiveness and getting Irish labour costs back into line with similar economies is central to economic recovery.

Director General of RGDATA, Tara Buckley described the JLC agreements as “antiquated” and explained that for the sake of job preservation, we need to abolish JCLs entirely. RGDATA has been in discussions with the government over the past month about changing or abolishing the JLC agreements but they are now waiting to hear the recommendations of these discussions and there is no time frame in which this is set to happen.

All of the arguments pertaining to the cut in minimum wage make sense. So why then are these draconian JLC rates still in place when the government has openly acknowledged that the minimum wage was uncompetitive? This needs to change immediately.

This year has seen many businesses truly tested and the weather conditions during prime shopping season was just another blow. However the next couple of weeks will be the busiest of the year so make sure you do all you can to keep your loyal customers coming back through your door next year.

Here at ShelfLife we would like to wish everyone in the trade a happy and very prosperous Christmas season and a peaceful new year.

Fionnuala Carolan



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