FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CONSTRUCTION INDUSTRY FEDERATION - AND - CONSTRUCTION INDUSTRY COMMITTEE, IRISH CONGRESS OF TRADE UNIONS DIVISION : Chairman: Mr McGee Employer Member: Mr Murphy Worker Member: Mr Nash |
1. (1) Towards 2016 Transitional Agreement (2) Claim For 10% Pay Cut
BACKGROUND:
2. This dispute arose from the position adopted by the Construction Industry Federation (CIF) following the conclusion of a draft agreement entitled 'Towards 2016 - Review & Transitional Agreement: 2008-2009'. The CIF has rejected the terms of this agreement and is also seeking a 10% reduction in rates currently registered with the Labour Court in the relevant Registered Employment Agreement for the construction industry.
This dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 16th December, 2008, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 20th February, 2009, the earliest date suitable to the parties.
UNION'S ARGUMENTS:
3. 1. The Court has always defended the application of national pay agreements.
2. The pay increase will not affect the competitiveness of any one construction company as it will apply across the whole construction sector.
3.The construction industry's survival requires the taking of measures such as improving access to credit and not wage cuts.
EMPLOYER'S ARGUMENTS:
4. 1. All other social partners, apart from the Irish Congress of Trade Unions, have effectively rejected the current transitional proposals because of the state of the economy.
2. Falling interest rates and deflation have resulted in such a dramatic reduction in the cost of living that a pay reduction - not a pay increase - is warranted.
3.The Registered Employment Agreement is an anachronistic and inflexible restriction on the construction industry.
RECOMMENDATION:
The Court has carefully considered the written and oral submissions made to it by the parties.
It is agreed by the parties that there can be no doubting the current recessionary state of the industry, where land and house prices have fallen sharply, contracts are being renegotiated downwards and many thousands of construction jobs are being lost.
During the years before 2008, when property prices and employment levels were at all -time record levels, there was considerable competition in the market for labour, which was partly supplied from other countries because of the skill shortages in Ireland. During that period, the REA rates tended to operate as a floor rather than a ceiling. This is borne out by the CSO quarterly statistics on average earnings and hours worked which reveal that in early 2008, the hourly rate for skilled workers in the construction industry stood at €21.28 per hour for an average 43.3-hour week, compared with the REA craft rate which was €18.60 per hour. The figure supplied to the Court for the whole of 2008, when rates had begun to drop, was €20.91 per hour. This was still 12.4% above the REA rate.
For unskilled workers, the average hourly figure in the first quarter of 2008 peaked at €17.99 over 46.1 hours, vis-�-vis rates between €14.88 and €18.04 provided for in the REA, but averaging, according to the C.I.F., about €16.00 per hour. For the whole of 2008, the C.I.F. put forward the view that the hourly rate averaged €17.80 per hour. This again is some 11.25% above the REA rate.
As the industry contracts and pay rates drop, as both sides agree they are doing, (and this is borne out by the CSO figures) they will, logically, bottom out at or near the REA rates (which can only be varied by agreement). Given the amount by which the market will naturally reduce the rates, the Court does not feel that a further reduction, as claimed by the C.I.F., is justified nor would it necessarily, of itself, create or maintain employment in the industry. The Court does not therefore recommend concession of the CIF’s claim.
Discussions on the 3.5% increase due under the current phase of “Towards 2016” have been perfunctory, largely obfuscated by the demand from the employers’ side for a 10% deduction in pay.
The Court has noted, in the course of the hearing, a willingness on the part of both sides to engage in further discussions with a view to revisiting the increase of 3.5%. In this context, the Court reminds the parties that the Court has for many years, by the joint will of the Social Partners, been the guardian of successive National Agreements. Quite a number of Companies have already paid the terms and neither the Employer Organisations nor the Government have abandoned the Agreement despite expressing an economic inability to pay the terms due on time.
Given all of the above, the Court recommends that the parties re-engage meaningfully, as a matter of urgency, with a view to reaching an accommodation regarding the terms of the Agreement. As implementation of the terms has already been delayed by some nine months, the Court is of the view that this engagement, which would be most appropriately entered into at the Joint Industrial Council for the industry, should conclude within one month, at which stage, failing agreement, the parties may revert to the Court for a definitive Recommendation on this part of the claim.
Signed on behalf of the Labour Court
Raymond McGee
31st March, 2009______________________
DNDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to David P Noonan, Court Secretary.