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ISSUE 53 page 6

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Minimum wage in Ireland under pressure on two fronts

There are two kinds of minimum wage in Ireland:  a national rate set by the government and higher sectoral minimums in collective agreements registered by employers and trade unions (REAs) with the Labour Court or agreed by Joint Labour Committees (JLCs). Both are under attack in the current economic crisis.

When the government of Ireland recently received an aid package from the EU and the International Monetary Fund to mend its stricken public finances it published a National Recovery Plan. This not only envisaged spending cuts and tax increases worth about €15 billion over the next three years but reduced the national minimum wage by 11.6% from €8.65 to €7.65. Arguing that prices have fallen during the economic slump the plan describes the previous rate as a barrier to job creation and goes on to attack REAs and JLCs as ‘another form of labour market rigidity’.
While the Irish Congress of Trade Unions  criticised the plan as ‘savage and regressive’, employers appear to have seen it as a green light to withdraw from or renegotiate existing Registered Employment Agreements. Although there are currently 68 REAs there are four particularly important ones covering construction, electrical contracting, printing and drapery and footwear. In each of these industries a deal between a company and a union has become legally binding on all employers through registration. Now the Association of Electrical Contractors of Ireland (AECI) has given notice to the Labour Court that it will abrogate its agreement claiming that the electricians’ union (TEEU) will not negotiate a reduction in the minimum wage of €21.49 per hour which was being undercut by rogue firms. The TEEU rejects this claim and promises strike action if the REA is cancelled. Meanwhile the Construction Industry Federation (CIF) took another approach, applying to the Labour Court for a 20% reduction in the minimum for the sector. The Court recommended a 7.5% cut despite union opposition.
The kind of language emanating from the Irish government such as the commitment to remove ‘anomalies and obsolete provisions, so as to have a more streamlined, transparent and flexible model of wage setting’ added to the commitment to review the whole REA/JLC system does not bode well for a legal framework that served to regulate industrial relations in better times.

This feature is largely based on articles in European Employment Review


Recent rulings from the European Courts

German compulsory retirement gets green light again
UK consultation case to go to ECJ
There has been a series of cases before the European Court of Justice (ECJ) in which the authorities and private companies have attempted to ‘objectively justify’ compulsory retirement in Germany on a number of grounds. Some have been allowed and some have been ruled discriminatory. There was success for another employer recently when a cleaner, Mrs. Rosenbladt, argued that she was a victim of age discrimination when her contract was terminated as she turned 65. The company countered that it was abiding by the terms of the collective agreement in the commercial cleaning sector and that German law allowed for compulsory retirement.  The ECJ decided that the legislation aimed for a ‘better distribution of work between the generations’ and had the advantage of preventing workers being dismissed on capability grounds as they got older while the agreement took into account that the retiree would have a pension as a replacement income.
A decision of the American army to close a base in Hampshire is to be examined by the European Court of Justice to see if an alleged failure of consultation should result in compensation for the workers involved. A Mrs. Nolan, one of those made redundant in 2006 when the US base was closed, obtained an award of 30 days’ pay for herself and her colleagues from a UK employment tribunal but this was appealed by the US government quoting a previous ECJ case involving the Fujitsu company. The UK Court of Appeal was unclear at what stage of a process leading to redundancies the employer was obliged to consult workforce representatives and referred the matter to the ECJ.

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