Labour Court Database __________________________________________________________________________________ File Number: CD86708 Case Number: LCR10817 Section / Act: S67 Parties: OFFSHORE OIL INDUSTRY - and - ITGWU |
Claims for (a) wage increase under the 26th wage round and (b) the introduction of a pension scheme, for approximately 200 seasonal workers.
Recommendation:
7. Having regard to the economic conditions prevailing in the
industry and the current salary levels, the Court is of the
opinion that the Employers' rejection of the Union's claim is
warranted at the present time. The Court, therefore, does not
recommend concession of the claim. The Court does, however,
recommend that the parties initiate discussions without further
delay with a view to the early implementation of the pension
scheme which has already been agreed.
Division: Mr O'Connell Mr Collins Mr O'Murchu
Text of Document__________________________________________________________________
CD86708 THE LABOUR COURT LCR10817
CC861041 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. 10817
Parties: OFFSHORE EXPLORATION INDUSTRY
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claims for (a) wage increase under the 26th wage round and (b)
the introduction of a pension scheme, for approximately 200
seasonal workers.
Background:
2. Following the expiry of the 25th wage round for the workers
concerned on the 28th February, 1986, the Union lodged a claim for
an increase in pay rates and introduction of a pension scheme. At
a local level meeting held on the 20th May, 1986, Management
advised the Union that due to the crisis in the industry and what
it termed as the already exceptionally high pay rates of Irish
workers that it could not contemplate any increase in labour costs
for 1986. Following the failure of local level negotiations the
Union referred the matter to the conciliation service of the
Labour Court on the 19th June, 1986. No agreement could be
reached at a conciliation conference held on the 18th July and on
the 2nd September the matter was referred to the Labour Court for
investigation and recommendation. A Court hearing took place on
the 7th October, 1986.
Claim (a) - wage increase under the 26th wage round
Union's arguments:
3. (a) In its claim for an increase under the current wage
round, the Union simply sought an adjustment in pay
rates which would be in line with the normality of
settlements in the private sector during the course of
the round negotiations. It was conscious at all times
of the difficulties being experienced by the industry
and therefore it did not seek any major improvement in
pay and conditions of employment. What it did seek was
a pay increase which would protect the pay rates which
have been built up over many years but which have been
gradually depressed in relative terms in recent years.
(b) The workers covered by this claim only secure employment
for very short periods during the drilling season and
depend upon the pay for those brief periods of work to
determine their living standard for the rest of the
year. Therefore, a phased agreement has no validity for
these workers.
(c) The Union has co-operated in many respects to reduce
overall labour costs, particularly in respect of manning
levels. In recent years Management has successfully
argued that it cannot have the same labour content in
its operations and the Union has attempted to help
resolve that problem. Last year it acknowledged the
difficulties in the industry by agreeing on a very
moderate pay increase.
(d) Up to the 25th July, 1986, there were a total of 148
settlements under the 26th round, covering some 9,450
workers. The average cumulative increase was 7.2% and
the average duration was 13.7 months. The annualised
increase based on these figures is 6.3%. The Union
would therefore urge the Court to make a recommendation
in line with the national settlements and in that way
protect the pay levels of the workers concerned which
have been achieved over many years of collective
bargaining.
Management's arguments:
4. (i) It has to be recognised and accepted that offshore
exploration is an international industry and that
exploration activity in Irish waters must be looked at
as part of that international industry. The Union has
for many years argued that it is part of this
international industry and has as a consequence
succeeded in obtaining pay and working agreements which
by any standard are more than comparative to that
international industry. It is not therefore appropriate
on this occasion to argue on a domestic internal Irish
comparison for the purposes of obtaining improved pay
and conditions. Offshore operations in Ireland cannot
be immune from the international economics of the
industry and its consequent repercussions.
(ii) The slump in exploration activity is not confined to the
U.K. and Ireland but is a worldwide phenomenon (details
supplied to the Court). Redundancies have led to
thousands of job losses.
(iii)Exploration originating from Irish bases is almost
without exception, carried out by contractors who
operate out of Aberdeen with specialist drilling labour
supplied from Aberdeen. These specialists have been
subject to a pay freeze and in fact in some cases actual
reductions in pay for those lucky to be remaining in
work and substantial numbers of redundancies for the
remainder. These cut-backs have been implemented with
the objective of protecting as many jobs as possible.
So far some 7,000 jobs have been lost in offshore
operations in the U.K.
(iv) The utilization charts for September, 1986, for North
Sea semi submersible and jack-up drilling rigs (details
supplied to the Court), show that at this time jack up
drilling rig utilization is at 66% while semi
submersible utilization is at 43%. It is obvious that
these utilization factors are going to decrease further
as the contracts in these rigs come to an end. It is
estimated that when existing contracts run out there
will be a total of 44 semi-submersible and 43 jack-up
rigs idle.
(v) The situation in Irish waters confirms this low activity
level. In February, 1986, it was anticipated that
approximately 15 wells would be drilled during the
drilling season 1986. The reality is that only six
wells will be drilled in Irish waters this year and the
outlook for 1987 is infinitely worse. Current
information suggests that only three wells, already
committed, will be drilled in 1987.
(vi) The Employers reject any argument that Irish workers are
underpaid for the tasks performed. For example a day
cook earns #22,080 per annum. The Labour costs of
exploration operated from Irish bases are substantially
in excess of Labour costs in most other countries and in
particular the
cost of North Sea Operators (details of Irish labour
costs supplied to the Court). This pay structure in
both cases is in respect of a 28 day cycle of which 14
days are spent offshore and 14 days onshore (Field
Break). During the 14 days offshore rig workers work 14
days x 12 hours per day which is a total of 168 hours
work in the 4 week cycle. The Court will note that the
earnings of Irish exploration workers are up to 9% in
excess of earnings for identical jobs in the North Sea.
(vii)A similar examination of the rates of pay of seamen
engaged on the supply vessels, which service exploration
rigs, discloses that the earnings of Irish workers is up
to 55% greater than the earnings of seamen on U.K.