Wednesday, 25 May 2011

Report of the Independent Review of EROs and REA Wage-Setting Mechanisms

The Report of the Independent Review of EROs and REA Wage-Setting Mechanisms is available here. Click here to read TASC's response. On behalf of the Coalition to Protect the Low Paid, Bill Abom said: "The finding that the JLC wage setting mechanism should be maintained to protect reasonable employment standards for vulnerable workers is welcome". Meanwhile, in the blogosphere, click here to read Michael Taft's take on the report, and here to read the thread over on Irish Economy.


Rory O'Farrell said...

Michael Taft's link needs to be edited a bit. There is an extra http bit.

progressive-economy@tasc said...

Thanks Rory, that should be sorted now ...

Michelle O'Sullivan said...

The Duffy review was a legacy of the last Governmet. I am doubtful that the new Govt would have commissioned such a report but rather would have waited for the High court decision on JLC constitutionality which should be issued soon. The new Govt may think they have solved both union and employer concerns. Because of the report, the JLCs will stay but the Bruton proposals would effectively decommission them, akin to what the Thatcher government did in the 1980s with UK Wages Councils. In addition, the list of Bruton criteria mentioned in the IT, which JLCs would have to consider in making proposals, all relate to competitiveness issues but none refer to issues like a living income. Surprisingly (or not)some former Fianna Fail ministers critised the Bruton propsoals when their own Industrial Relations (Amendment) Bill 2009 which included some JLC reform measures was left sitting and never introduced.

Rory O'Farrell said...

One issue that is being lost is that there is poor enforcement of JLCs. So better enforcement should definitely be on the table.

Regarding competitiveness, less than 25% of costs in hospitality are wages (and this is including wages of management). So for wage cuts to have a meaningful increase in employment firms would have to
1) be operating near capacity (in terms of workers)
2) operate in an almost perfectly competitive market (so they pass on the wage cut to customers)
3) and the demand for their sector be very price sensitive (elasticity more than 4)

These 3 assumptions are very unrealistic.

I think restaurants in Ireland are very inconsistent. This isn't such a problem for a local person, they know the nice places. But for tourists it is a serious issue. I think we could improve competitiveness by having some way of tackling this information asymmetry. Some sort of rating scale like the Michelin guides use, but far broader in scope. This would encourage restaurants and hotels to improve their competitiveness by improving their quality. They would probably need to invest more in their staff to achieve this.

It also seems that Bruton is trying to abolish Sunday as a special day. That has broad impact on society in general. I think it would be a huge reverse if the government decides to abolish the weekend.

Finally there is the effect on aggregate demand, which would be hugely negative.