Government ministers have supported a SIPTU demand that restaurant and hotel owners join the new Joint Labour Council (JLC) process established to agree conditions for workers in the sector.

In the lead up to last month’s Budget announcement, SIPTU called on the Government to remove the hospitality sector’s special VAT rate of 9% if employers continued to refuse to engage in the JLC process.

In his Budget, Minister for Finance, Michael Noonan, maintained the sector’s reduced VAT rate. However, in response to the SIPTU demand both Ministers at the Department of Jobs, Enterprise and Innovation, Richard Bruton, and Junior Minster, Ged Nash, called on employers to enter the JLC process.

Nash said the reformed JLCs were not just about setting minimum pay terms for workers but also about industry standards. He added that all sides should “grasp the opportunity” that existed under the new system.

SIPTU Services Division Organiser, John King said: “Employers in the sector have refused to engage in discussions for a new Joint Labour Committee which would set fair wage rates and conditions for workers in hotels and restaurants across the country.

“Although it is government policy that the workers in these industries should be covered by a JLC, employers have been given an effective veto over this policy by refusing to engage with trade unions and the labour relations machinery of the State”.

In the lead up to the Budget announcement SIPTU released new research that showed that the VAT reduction was not used to improve wages for workers in the sector or passed on in the form of lower prices to customers.

The research showed that in the period before July 2011 (when VAT was reduced) and September 2011, only 24% of restaurants surveyed decreased prices. There was no price change in 64% of restaurants while 20% actually increased prices.

In a further comparison between pre-July 2011 prices and those in September 2013 it was found that 24% decreased prices while there was no change in 40% of restaurants surveyed and 36% of restaurants actually increased prices.

These findings are in stark contrast to the claim by the Restaurants Association of Ireland in September 2013 that 100% of its members had passed on the VAT reduction to customers.

The SIPTU research also showed earnings in the hospitality sector fell by 3.4% between early 2011 and the middle of 2014, indicating that the collapse of the JLC wage setting mechanism in June 2011 paved the way for many employers to drive down wages.

JobBridge figures for September 2014 also indicated that one in ten participants in the activation scheme are in the hospitality sector.

John King added: “The ‘race to the bottom’ in wages in the sector means employers are putting the burden on the State to pay a living wage through Jobseekers Allowance and Family Income Supplement”.