Ministers have urged employers in the hotel and restaurant sector to engage with unions as part of a reformed process for determining terms and conditions for staff.
The country's largest union, Siptu, today said employers were refusing to engage on the establishment of a new joint labour committee for the hospitality sector. It called on the Government to withdraw the special reduced Vat rate for the sector until employers agreed to take part in the new system.
The union said that benefits of the reduction in the Vat rate for the hospitality sector from 13.5 per cent to 9 per cent had not been passed on to customers, employees or the exchequer
Hotels and restaurants responded furiously to the Siptu move. Representative bodies accused the union of being irresponsible, reckless and anti-job creation.
Minister for Enterprise and Jobs Richard Bruton said Vat reduction had worked and had led to vibrant growth. However he said the Government had reformed the joint labour committee process -- which had been struck down by the courts in 2011. He said there was now a flexible and responsive system in place and he urged all parties to use the new process.
Minister of State for Employment and Business Ged Nash said the reformed joint labour committees were not just about setting minimum pay terms for workers but also about industry standards. He also encouraged all sides to "grasp the opportunity" that existed under the new system.
Siptu vice president Patricia King said the hospitality sector was receiving the benefit from the State of €350 million in Vat foregone.
She said that since the striking down of the original joint labour committee for the hospitality sector, the pattern of the workforce had changed. She said there was no argument that there had been an 11 per cent rise in employment. However she said the number of full time positions had fallen by 24 per cent while employers had increased the number of fixed term and part-time staff by 32 per cent.
“They have brought down people’s terms and conditions and there are now 40 per cent more staff being employed on the minimum wage.”
Ms King said that immediately after the legislation for the reformed joint labour committees had been enacted, employers in the hospitality sector had decided “we are having none of that”. She said the only thing they they wanted to do was to pay the minimum wage and keep conditions as low as they could keep them.
The union said a survey of restaurant menu prices, which it commissioned, had found that in the period before July 2011 (when Vat was reduced) and September 2011, only 24 percent of restaurants surveyed decreased prices. “There was no price change in 64 per cent of restaurants while 20 percent actually increased prices,” it said.
The Irish Hotels Federation (IHF) criticised the Siptu proposal as "irresponsible and reckless ".
IHF president Stephen McNally said the Vat reduction “continues to be one of the most successful job creation initiatives in modern times, helping to create more than 33,000 new jobs”.
“The measure is yielding real results and benefits on the ground with almost three quarters of hotels and guesthouses hiring additional new staff in the last year alone. For Siptu to now call for its withdrawal is nothing short of reckless given the number of livelihoods that depend on Irish tourism.”
He said the re-introduction of the joint labour committee system “jeopardises jobs by creating counterproductive inefficiencies and rigidities into the Irish labour market”.
He said joint labour committees had “lost all relevance since the introduction of the national minimum wage.
The Restaurants Association of Ireland described the Siptu move as "nonsensical" and "anti-job creation".
It chief executive Adrian Cummins said: "Siptu have once again proved their removal from reality with their typical anti-job creation rhetoric. This call to reverse the Vat rate is directly hindering the creation of 50,000 jobs by 2020 which will be possible if the Vat rate is kept at 9 per cent."
