Minister for Enterprise Mary Hanafin has established an independent review of the system of setting legally-binding sectoral wage agreements.

For some time employers have criticised the system, saying they are unaffordable and damage competitiveness.

The review will be carried out by Chairman of the Labour Court Kevin Duffy and Dr Frank Walsh, lecturer in economics in UCD.

Under the statutory wage-fixing system, employers and unions in sectors ranging from construction to hairdressing negotiate legally-binding agreements on wages, terms and conditions for employees in their sector.

The Government had committed to review the mechanisms known as Employment Regulation Orders (ERO) and Registered Employment Agreements (REA) in the National Recovery Plan, and in the joint EU/IMF programme for Ireland.

Chambers Ireland has welcomed the review of statutory wage setting mechanisms, describing it as long overdue.

Chief Executive Ian Talbot said the abolition of EROs and REAs, combined with the recent cut in the National Minimum Wage, would support competitiveness across the economy.

The statement from the Department said the appointments of Mr Duffy and Dr Walsh had regard to the need for an independent review to draw on particular knowledge of wage setting mechanisms and independent economic expertise.

Ms Hanafin said the Government had to ensure that statutory wage fixing mechanisms did not have a negative impact on economic performance and employment levels.

She urged interested parties to submit their views on the continued relevance, fairness and efficiency of the current ERO and REA mechanisms.

The review is to be completed within six weeks of the closing date for receiving submissions, which is 25 February.