EROs & REAs – pay rates under threat

As part of the so-called National Recovery Plan, a review of the framework of statutory wage setting mechanisms for Employment Regulation Orders (ERO) and Registered Employment Agreement (REA) has been established.  The review is also a commitment under the provisions of the joint EU-IMF Programme for Ireland. The outgoing government had requested that the review be completed within a short timeframe – approximately the end of March.

In announcing  the review, the then for Minister for Enterprise Trade and Innovation, Mary Hanafin, advised of the need to “ensure that statutory wage fixing mechanisms work effectively and efficiently and that they do not have a negative impact on economic performance and employment levels”.  In other words, is there a basis to either abolish this system for the protection of minimum standards in given sectors of the economy,  i.e. EROs in the hospitality sector, REAs in the Construction sector or a basis to provide employers with a mechanism to pay minimum rates for a given period of time, which will have the same affect as abolishing them over the longer term.

The state, employer’s bodies and many within the wider ranks of the Fine Gael party view such minimum standards as labour market rigidities that are erosive to Irish competitiveness. This is a false line of argument in economic terms and masks the real agenda.

The fact that the majority of these REA / EROs apply in the non-traded sectors of the economy and not subject to the rigors of the international market like other sectors, illustrates that the motivation to abolish them is about something else. It is about pushing down pay rates to increase profit margins.

Heretofore, trade unions have relied on these REA / EROs as an alternative to developing potent bargaining structures and workplace organisation.  In the context of a downturn, it is correct for the unions to protect minimum standards, but only as a platform to be used to developed real trade union organisation. A task which the majority of the unions have failed to do, particularly over the lifetime of the boom and now workers will pay the price for their complacency. For now, the unions must rigorously defend (with militant action) the minimum pay rates to stop the next stage of the “race to the bottom”.