The underpayment of foreign workers employed by agencies in Ireland has implications for all employees, writes Carl O'Brien
The senior trade union official scratched his head. He had just arrived at a building site in Co Waterford last week as part of a blitz to monitor pay and conditions for construction workers. What he happened upon was more complicated than he bargained for.
"The foreman was German," the union official said. "But the workers were Polish, and employed by a separate labour agency. The management were employed by someone else. The supermarket they were building was owned by another European consortium. It's difficult to know who you're dealing with." The workers, it turned out, were being paid around half of the industry standard rates. Soon they will have moved on to the next construction site. Within weeks, the workers will be back in Poland, leaving a cloud of dust behind them. "They're moving so fast that it's hard to keep up with them," the official says. "It's hard to even find out who is responsible for workers, and by that time they've gone."
Welcome to the labyrinthine world of labour agencies and outsourcing, where employment is never quite as it seems. It's an environment where workers are contracted through complex supply chains of agencies which can bypass industry-agreed pay rates by using a ready supply of cheap and temporary labour from poorer countries.
And it's fast becoming the way to do business. In areas such as construction, the hospitality industry, food processing and agriculture, more and more migrant workers are being hired on these short-term contracts.
A new survey shows that Ireland has the highest proportion of workers employed on temporary contracts across the EU. Trade unions, meanwhile, estimate that well in excess of 500 labour agencies are operating out of Ireland.
While supporters of this approach to business say it gives companies greater flexibility to operate in a free labour market, critics say it is being used to depress wages, exploit workers and dismantle benefits, such as pensions and holiday pay, associated with a permanent workforce.
"It's a big grey area," says Noel Dowling, Siptu's national organiser. "You go into a hotel, for example, and you might have several agencies employing catering staff, waiting staff, cleaning staff. Often you don't know who the real employer is. And if you do know, agencies can argue that their status exempts them from paying standard rates.
"This is, in effect, a device being used to undercut established rates of pay across a range of industries. We're fighting these guys on these points every single day of the week." For all our anti-discrimination laws and workplace protection measures, they have proved ineffective in stamping out this approach to doing business. One reason is that Ireland, along with just two other EU countries, has yet to legislate properly for workers employed by labour agencies to be treated the same as permanent employees.
The use of agency work has been behind some of the most glaring examples of exploitation in the workplace, with employees on mushroom farms being paid as little as €2.50 an hour.
In practice, though, many will pay in or around the minimum wage, regardless of established agreements for pay in sectors such as construction which may be two or three times the legal minimum.
WHILE REPLACING IRISH labour with cheaper foreign workers has largely been confined to low-paid areas of industry, the Irish Ferries controversy - where management tried to replace Irish workers with cheaper Latvian staff - was a jolting reminder that middle-income earners weren't immune from the threat of agency staff.
This week, for the first time, the issue of whether firms supplying labour from cheaper EU countries should have to apply higher rates of pay and conditions came before the courts in two significant cases. It's an issue that goes to the heart of whether internal market rules should take precedence over pay and conditions that are seen as integral to a country's social model.
In what many see as legal landmarks, the European Court of Justice has indicated that trade unions have the right to take industrial action to compel companies from other member states to pay their workers the same wages as domestic workers receive under the collective agreements.
In one case, Swedish workers took industrial action against "unfair competition" from cheaper Latvian labourers, well below Sweden's own basic pay rates. The court indicated that workers were within their rights to take industrial action over companies using cheap labour from poorer member states. But any such action, it said, had to be in pursuit of an overall social good and not just to safeguard their own privileged positions. In another case, Finnish ferry company Viking Line sought to re-flag in Estonia to benefit from cheaper crews and lesser working conditions. The court again indicated that any industrial action by unions to stop the company relocating would have to be proportionate and motivated by seeking similar terms for the workers in the company's new base.
The employer's group, Ibec, responded through a spokesman saying flexibility in the labour market was hugely important and it would be concerned at any new measures that would interfere with the capacity of employers to put in place terms and conditions.
Siptu, however, said it hoped the European Court of Justice would uphold the findings of its legal officers.
"These are major steps forward in the fight against those employers who fundamentally oppose the right of workers, organised in their trade unions, to defend collective agreements from being undermined through the use of sweated labour," said Siptu president Jack O'Connor.
MANY IN UNIONS see the developments not as a major breakthrough, but as a line in the sand. They haven't won any new rights, say many activists, but at least they haven't lost the argument that a race to the bottom ultimately undermines the common good.
"If the finding had gone the other way, the court would have been saying, in effect, that Jim Larkin was wrong to organise the protests in 1913, or that England was wrong to do away with the anti-combination laws in the 1800s, which paved the way for the trade union movement," says Mike Jennings, an industrial relations expert now working with a university lecturers' union. "The stakes were very high in this case."
Others say it may make corporations think twice about trying to replace existing labour with cheaper labour, a development which has been emerging recently in a range of traditionally well-paid areas such as the IT sector and the newspaper industry.
The Government, meanwhile, points to a new get-tough policy over exploitation which it says will help curb mistreatment of workers. A new labour standards enforcement agency - one of the measures agreed by social partners in the recent partnership agreement - has been established, aimed at providing greater protection to workers' rights. The number of labour inspectors has also been increased from 30 to 90. Also, a loophole which allowed Irish Ferries to claim more than €4 million towards the cost of statutory redundancy payments to Irish staff replaced by cheaper labour has been plugged.
For now, one part of the battle to protect wages and conditions has been won. Some employers' groups are continuing to study the court's initial findings, with more than a few insisting privately that the court's findings are specific to the countries they related to.
Unions, meanwhile, say the final wording of the ruling may have a significant impact on how much scope they have to protect hard-fought collective pay agreements. They are continuing to call for the Government to do more by legislating for the equal treatment of workers employed by labour agencies with permanent employees.
While much is uncertain about the future, one thing is clear: in an increasingly globalised world, the fight to protect employees against the threat of cheap and flexible labour is just beginning.