Irish Economy
Irish Economy: Tourism/restaurant jobs up 23,000 since 2011 - how many from VAT cut?
By Michael Hennigan, Finfacts founder and editor
Oct 9, 2014 - 2:15 PM

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Ashford Castle Hotel, County Mayo, Ireland.

Irish Economy: CSO data show that tourism/restaurant jobs rose 23,000 from the second quarter of 2011 to the same period in 2014 but it's foolish or self-serving to claim all of these jobs resulted from a cut in the VAT rate. A major trade union today proposed that the VAT cut be reversed.

The total of 23,000 comprised 12,000 Irish nationals and 11,000 non-Irish while the total employment of 138,000 comprised 89,000 Irish and 49,000 non-Irish.

In May 2011 Michael Noonan, finance minister, announced a cut in the VAT rate on food and accommodation services from 13.5% to 9% that would be paid for via a tax/levy on Irish pension funds.

Today the Irish Hotels Federation (IHF) said 33,000 new jobs have been created  since mid 2011 - -  the difference of 10,000 is the number that was additionally created in the economy but this is a typical ruse to massage up the figures..

A total of €2.3bn has been seized from pension funds but the economic impact is ignored as if it was all pin money taken from wealthy folk, while claiming all new jobs resulted from the VAT rate cut defies common sense.

Fáilte Ireland published a report on the VAT cut last July.

Siptu, the trade union, said today that the benefits of the reduction in the VAT rate had not been passed on to customers, employees or the exchequer.

The traditional joint labour committee system of setting wages in some sectors of the economy was declared invalid by the courts in 2011 but the Government responded by presenting new legislation to the Oireachtas to restore the system in a number of sectors.

John King, Siptu divisional organiser, 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 the workers in these industries  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. This veto needs to be removed. We have called on the Minister for Finance to withdraw the favourable VAT reduction policy given to hotel and restaurant owners unless they immediately agree to enter discussions on a new JLC for the hospitality sector.”

Stephen McNally, president of the IHF, said that the VAT measure continues to be one of the most successful job creation initiatives in modern times, helping to create more than 33,000 new jobs.

“Since its introduction back in 2011, the tourism VAT rate has been an enormous success in levelling the playing field for Irish tourism when competing with other international destinations."

McNally said the re-introduction of the joint labour committee (JLC) system jeopardises jobs by creating counterproductive inefficiencies and rigidities into the Irish labour market. He added that JLCs have lost all relevance since the introduction of the National Minimum Wage Act which has provided Ireland with one of the highest gross minimum wage rates in Europe. "This goes hand in hand with over 40 other separate pieces of extensive employment legislation including the Working Time Directive."

The IHF said it "continues to call for all employment law to be created solely by legislation introduced by the Oireachtas alone and to be applicable to all employments. The IHF is strongly opposed to employment law being created by organisations such as the JLC or the Labour Court."

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