Guest post by Michelle O'Sullivan: Minimum wage regulation

Michelle O'Sullivan01/02/2010

Michelle O'Sullivan: Last week the Tánaiste, Mary Coughlan, announced that legislation will be introduced allowing employers to claim an inability to pay the rates set by Joint Labour Committees (JLCs).

JLCs are statutory bodies which set legally binding minimum pay and conditions of employment in low paid employments where collective bargaining is poorly developed. The JLCs owe their origin to the Trades Boards, which were introduced in 1909 by the British Parliament for Ireland and Great Britain in an attempt to eradicate ‘sweated’ working conditions. At the time Winston Churchill declared the necessity for such machinery because the laws of supply and demand could not eliminate sweating or prevent the undercutting of wages.

JLCs have remained in existence since 1909 and today mostly cover services sector employments like cleaning, catering, hotels, security and hairdressing. In addition to setting minimum pay rates, often above the National Minimum Wage, JLCs also set minimum conditions some of which employees would not get through other employment legislation like sick pay.

Mary Coughlan’s announcement comes following constitutional challenges against JLCs by two sets of employers: first the Irish Hotels Federation (IHF), then a fast food employers body, the Quick Service Food Alliance. The hotels case was settled out of court, perhaps unsurprisingly as the IHF is an employer representative on the JLCs. Before a decision could be reached on the fast food employers’ case, the Tánaiste introduced an Industrial Relations (Amendment) Bill 2009, which would make JLCs constitutional. Employers had argued that the Labour Court’s power to confirm JLC proposals was unconstitutional because it was making law without legislative or parliamentary control.

While the Bill would rectify this anomaly, the Tánaiste is now going to allow sub-JLC rates be paid through an inability to pay clause. On Today FM’s Sunday Supplement show of 24th January, Minister Mary Hanafin insisted that under the inability to pay clause, employers and employees within organizations would have to agree on lower rates of pay but she could not say by how much lower. The likelihood though that low paid, non-unionised and migrant employees would refuse an employer's request for lower pay rates is highly unlikely. An inability to pay clause for JLC rates had been proposed before by the Commission of Inquiry on Industrial Relations in 1981. The Department of Labour was very critical of the inability to pay proposition, saying “any proposal which would allow for a ‘fall-back’ position weakens the principle in such a serious way as to make a nonsense of the entire concept”.

The implications of the proposed inability to pay clause may depend on the take-up. A similar clause exists for the National Minimum Wage but has not been used.
Dr. Michelle O'Sullivan lectures in Industrial Relations at the University of Limerick

Posted in: Labour market

Tagged with: Wages


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