The basic framework of the current JLC/REA regulatory system requires 'radical overhaul' so as to make it fairer and more responsive to changing economic circumstances and labour market conditions', according to Minister for Jobs, Enterprise and Innovation Richard Bruton.
Minister Bruton was speaking as he published the Report of the Independent Review of Employment Regulation Orders (EROs) and Registered Employment Agreement Wage Setting Mechanisms.
He has announced a time-limited programme for a Government decision to be taken and announced on an action plan before the end of June 2011.
As part of this programme, Minister Bruton will be setting out proposals arising from the recommendations and other issues raised by the report,which will then be the subject of time-limited discussions with relevant stakeholders.
Minister Bruton has been asked to bring an action plan to the Government in time to be finalised by the end of June 2011.
But IBEC said the report, which favours maintaining the JLC system, was totally out of touch with the need to create and sustain jobs. IBEC will be engaging with the Government in the coming weeks and will urge it to reject the report's findings and instead to 'abolish the antiquated JLC system and bring the REA wage setting framework into the 21st century,' it said.
IBEC director of industrial relations Brendan McGinty said the JLC system preserves a 37% average premium above minimum rates that apply in the UK.
'Getting wage costs back into line is an essential part of our economic recovery and is needed to stimulate growth and create jobs. IBEC rejects the assertion that the main justification for the JLC system is the absence of any other system of determining pay and conditions of employment, beyond the statutory minimum in the sectors concerned.
'These employers and workers should be free to determine their own arrangements in the same way as the overwhelming majority of those in the private sector do. Tinkering with the antiquated system of wage rules will do nothing to help the many thousand of companies desperately trying to say afloat,' said McGinty.
Minister Bruton said It is his intention to complete discussions with relevant parties by Friday, 10 June, ahead of submitting a final action plan to Cabinet before the end of the month.
'There is no adjustment as traumatic for any worker as the loss of a job, and the retail, hotel and catering sectors - the major sectors affected by these wage-setting mechanisms - have suffered a 20% loss in employment in the past three years,' said the Minister.
'Furthermore, in many cases businesses are competing directly with the UK market where wages are 25-30% lower in these sectors; while rates of pay in the sectors covered by the JLCs have increased much faster than the National Minimum Wage, in some cases by more than 20%. That is why it is important to formally begin a time-limited process of agreeing a series of urgent reforms to these mechanisms.'
