Economic Crisis and the Restructuring of Wage Setting Mechanisms for Vulnerable Workers in Ireland

Abstract

The Memorandum of Understanding negotiated with the EU/IMF in 2010 committed the government to reform the Joint Labour Committee (JLC) system covering low pay workers. A significant rationale for the proposed reform was the claim that JLC regulations unduly added to the cost of labour regarding overtime rates and particularly premiums for Sunday working. Using the 2007 National Employment Survey this paper examines the structure of earnings of workers likely to be covered by the JLC system and the extent to which low pay workers benefit from overtime earnings, shift allowances and bonuses in the private sector. The evidence does not support the argument that overtime payments including Sunday premiums in sectors covered by JLCs represent a major cost to employers in general. Few workers actually benefit from the JLC overtime rates. We argue that the removal of a floor on conditions of employment provided by the JLCs may not always be in the interests of the employer but may create a race to the bottom in low pay sectors of the economy.