Economic crisis and the restructuring of wage setting mechanisms for vulnerable workers in

Ireland

Thomas Turner and Michelle O’Sullivan

ICTU Women’s Conference1st March 2012

michelle.osullivan@ul.ie

Historical context• Trade Boards were predecessors to JLCs

• Designed to protect low paid workers where collective bargaining was inadequate

• The Industrial Relations Act 1946– Renamed JLCs– Widened powers

Employees covered by JLCs

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

1926 1953 1962 1976 1984 1989 1998

First challenge to JLCs

• Constitutional challenge against Catering JLC from Quick Service Food Alliance 2008

• Research on employers’ reasons for legal challenge:– Improved enforcement by NERA– Higher detection of underpayments – Employers critical of overtime pay, particularly

Sunday pay

Second emerging challenge

• Economic crisis• Arguments that JLC pay rates were “costing jobs”• IMF/EU/ECB bail-out

– Commitment to review JLC system– “Need to increase flexibility and facilitate re-

adjustment in the labour market”

Paper objectives

• To examine the structure of earnings & hours of low paid workers – What groups more likely to earn JLC wages?– Examine extent of overtime & shift working– Examine extent of overtime earnings, shift

allowances and bonuses to low paid workers– Comparison of low paid and higher paid

workers re overtime etc. earnings

Methodology

• 2007 National Employment Survey (NES) in the private sector

• Dependent measure is average hourly earnings

• Approximately 75 per cent of respondents (44,861) in the private sector

• Grossed up to the employed labour force of approximately 1.7 million employees.

How many employees are low paid?

• Median hourly earnings €16.29

• Low pay work as two thirds of median hourly earnings - €10.86 or less – 25% private sector workers (323,912) are low

paid

• JLC range - €8.23 to €9.68

Low pay earnings

Low pay in

Private sector

N % of low pay private sector

Less than €8.23

10% 32,666 2.5%

JLC: €8.23-€9.68

52% 168,092 13%

€9.69 – €10.86

38% 123,154 9.5%

100% 323,912 25%

Who are JLC workers?

• Female – twice as likely – Account for 63% of JLC workers

• Less educated• Part-time

– 3 times more likely• Under 25 years of age

– 3 times more likely • Non-Irish

– Twice as likely

Who are JLC workers?

• Manual or routine service type work– 7 times more likely

• Non-union

• Low levels of employment service– 72% of workers less than 5 yrs

• Work in the hotels/restaurant and whole/retail sectors

Hourly earnings Mean

Hours worked per week JLC range 29.87

Above JLC range 35.86

No. of overtime hours per week

JLC range 0.5

Above JLC range 1.1

Overtime hours as % of hours worked weekly

JLC range 1.6%

Above JLC range 2.6%

Weekly overtime earnings JLC range €6.20

Above JLC range €25.70

Shift allowance per week JLC range €0.70

Above JLC range €10.50

Bonus earned per week JLC range €0.90

Above JLC range €21.3

Work a shift? JLC range 31.4%

Above JLC range 24.2%

Selected characteristics of workers covered by JLC rates

Hours worked per

week

No. of overtime hours per

week

Overtime earnings per

week

Shift allowance per week

Bonus earned per

week

Women 28 0.5 €5.0 €0.8 €1.0 Men 34 0.7 €8.4 €0.6 €0.7 Age Under 25 28 0.6 €6.1 €0.65 €1.0 25 to 35 34 0.7 €8.4 €0.82 €1.4 36 to 45 32 0.43 €5.4 €1.1 €0.54 Over 46 28 0.37 €4.2 €0.4 €0.28 Nationality Non-national 35 0.8 €10.1 €1.2 €1.7 National 28 0.4 €4.9 €0.5 €0.6 Status Part-time 20 0.4 €3.9 €0.5 €0.3 Full-time 37 0.7 €7.9 €0.9 €1.3 Union Non-member 29 0.5 €4.9 €0.7 €0.9 Member 33 1.1 €14.0 €0.8 €0.6 Sector Industry 36 0.7 €9.9 €0.7 €0.7 Wholesale/retail 29 0.8 €9.3 €0.2 €0.5 Hotels-restaurant 28 0.2 €2.7 €0.7 €0.1 Finance/admin 25 0.2 €2.6 €0.6 €0.6 Trans/others 32 0.5 €4.1 €1.8 €3.3

Distribution of overtime hours, earnings and shift allowance

Above the JLC range

%

At the JLC range

%

Hotel/restaurant at the JLC range

Wholesale/ retail at the JLC range

Overtime hours weekly None 79 86 94 78 Up to 2 hours 6 5 3 8 2 to 5 hours 6 5 2 9 5 to 10 hours 6 3 0 4 Over 10 hours 3 1 1 1 Overtime earnings weekly None 79 86 94 78 Up to 10 euro 2 2 1 2 10 to 20 euro 2 2 1 4 20 to 30 euro 1 2 1 4 Over 30 euro 16 7 3 12 Shift allowance per week None 91 97 95 97 Up to 15 euro 1 2 3 2 15 to 30 euro 1 .7 1 0 30 to 60 euro 1 .5 1 0 Over 60 euro 6 .3 0 0 Bonus earned per week None 92 97 98 97 Up to 20 euro 1 1.5 2 2 20 to 40 euro 1 .8 0 1 Over 40 euro 5 .7 0 0

N 1118692 168092 168092 168092

Workers on shift work and

receiving an allowance

%

Workers on shift work and not receiving an allowance

%

N

Above the JLC range

31

69

100%

(270166)

At the JLC range

6

94

100%

(52715) Total N

27

(87230)

73

(235651)

100

(322881)

Working time & earnings

• Workers who work no overtime and receive no shift allowance or bonuses more likely to be covered by JLC rates

• Workers who get no shift allowance twice as likely to work shifts.

Conclusion

• Evidence does not support the argument that extra payments such as Sunday premiums, shift allowance and over-time payments to workers covered by JLCs represent a major cost to employers in general.