Labour Court Database __________________________________________________________________________________ File Number: CD87542 Case Number: LCR11381 Section / Act: S67 Parties: BORD NA MONA - and - BORD NA MONA GROUP OF UNIONS;ATGWU |
Claims under the 26th wage round for: (a) a wage increase and, (b) a shorter working week.
Recommendation:
9. The Court has considered the issues raised by the parties in
their submissions to it and recommends as follows:
26th Round Increase
The Court recommends an initial pay pause of 3 months, followed by
a payment of an increase of 4% in respect of an agreement to last
15 months in total.
Common Starting Date
The Court does not recommend concession of this claim.
Operation of Analogue Arrangement
Having regard to the financial upsets to the Board deriving from
two successive bad summers in 1985 and 1986 the Court does not
consider it appropriate that any adjustment to wages should be
made under this heading at the present time.
Shorter Working Week
The Court does not recommend concession of this claim.
Division: Mr O'Connell Mr Collins Mr Devine
Text of Document__________________________________________________________________
CD87542 THE LABOUR COURT LCR11381
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11381
Parties: BORD NA MONA
and
BORD NA MONA GROUP OF UNIONS
Subject:
1. Claims under the 26th wage round for:
(a) a wage increase and,
(b) a shorter working week.
General Background:
2. This claim concerns approximately 5,800 workers employed as
general operative, craft and staff workers at all of the Board's
locations. The 25th wage round expired for the craft workers on
29th October 1986, for clerical staff on 31st December, 1986 and
for general workers on 28th January, 1987. The group served
claims under the 26th wage round for a wage increase and a shorter
working week. The Board rejected the claim. No agreement was
reached through local negotiations and on 5th February the matter
was referred to the conciliation service of the Labour Court. A
conciliation conference was held on 18th March, 1987 but no
agreement was reached. On 8th July, 1987, at the request of the
parties, the case was referred to the Court for investigation and
recommendation. A Labour Court hearing was held on 31st July,
1987.
Claim (a) : a wage increase
Background:
3. The basic rate of pay for the majority of the workers is
#157.60 (maximum of scale) for a forty hour working week. The
Group claimed a wage round increase in line with the norm
established for the wage round including the commercial sector.
The Board rejected the claim and sought a pay pause for the
duration of the wage round.
Unions' arguments:
4. (i) The Group's claim is aimed at restoring the living
standards of Bord Na Mona workers which have been
eroded over a number of years by the effects of
inflation and depressed take home income.
(ii) Under the 25th Round, the Bord Na Mona pay settlement
(Labour Court Recommendation No. 10343 refers) at 6%
was well below the norm in industry generally and among
the lowest of settlements in the Public Sector.
Earnings of permanent and seasonal Bord Na Mona workers
were substantially reduced in the period of the 25th
Round relative to earlier years due to the poor
production season in 1985.
(iii) As stated in Bord Na Mona's accounts for 1985/1986
payroll expenditure decreased by #5,755.309 or 9.4% on
the previous year. In the same period, revenue income
was generally maintained through the sale of peat
stocks. Consequently, the savings on payroll costs for
the duration of the 25th Round were considerable.
(iv) A review of the agreed Wages League Table reveals that
at the end of the 25th Round, pay rates in Bord Na Mona
had fallen behind the average of the other pay rates in
the Pay League. The slippage involved at the minimum
and maximum of the Bord Na Mona pay scale amounts to
#5.18 and #3.92 respectively.
(v) As the 26th Round settlements emerged, the employments
in the Bord Na Mona Wage League Table were assessed,
and the slippage in the Bord Na Mona rates increased
significantly. By refusing to take the Bord Na Mona
rates into line with the average of the Wages League
Table from the due dates, the Board is in breach of the
1979 Wage League/Relativity Productivity Agreement
approved by the Court.
(vi) The norm established in pay settlements under the 26th
Round generally is approximately 5.8% annually (details
supplied to the Court). The Unions have noted that
there is no pay pause recommended in most of the Labour
Court Recommendations for semi-State bodies.
(vii) The overall slippage in the wages of Bord Na Mona
workers is very significant when the wages league
slippage is taken into account and allowance is made
for an average 26th wage round pay adjustment.
(viii) The Group asks the Court to recommend an increase with
a common commencement date for all Bord employees
commencing with the early starters expiry date of the
25th wage round, that is 29th October, 1986 for 12
months. The Group appreciates that a common starting
date might involve a compensatory element for early
starters.
(ix) While the Group accepts that the Bord has experienced
financial difficulties, it is not accepted that they
are of a scale or duration that would justify a pay
freeze.
(x) Notwithstanding bad weather conditions the Board's most
recent published accounts (1985/1986) record a trading
surplus of #18.2m. The loss is mainly due to the full
payment of interest on borrowing amounting to #17.11m.
The loss was inflated by the inclusion of a #7.5m.
write off in a year of poor production, of the
investment in the deferred Ballyforan Briquette
Factory. A loss in the last financial year is likely
to occur owing to the Board's decision to pay full
interest charges for a year in which there was a
temporary shortfall in revenue. Many of the production
workers who provide the resources were laid off - the
usurers were not laid off-and it seems that the native
financial institutions were unwilling to share in the
sacrifices expected from the production workers.
(xi) The present financial difficulties are of a temporary
nature. The underlying trend in the Board's operation
is one of profitability. In the three accounting years
from 1982 to 1985, Bord Na Mona returned profits in
excess of #32 millions. Bord Na Mona is presently
projecting a net surplus of the order of #3 million for
1987, as outlined to the Unions on 11th May, 1987.
Moreover, the Board's temporary financial difficulties
are being largely offset as a result of a #25 million
soft loan and a probable #12.3 millions grant aid under
the E.E.C. Valorean Programme. The employees in Bord
Na Mona have already contributed in large measure to
the Board's savings and financial stability over the
past two years, through increased productivity,
acceptance of a low pay settlement under the 25th Round
and voluntary lay-offs of permanent workers over the
Winter period. The Board's proposal that Bord Na Mona
workers should now be asked to accept a further
sacrifice by way of a 26th Round pay freeze is
unreasonable and unrealistic and would be
counter-productive with regard to worker morale and
productivity at a time when the workforce should be
encouraged to maximise production in order to
re-instate peat stocks.
(xi) The production prospects are very good. Upwards of
68% of the milled peat target has been secured. Last
year only 30% of the milled peat target was harvested
when the Indian summer arrived in late Autumn.
(xii) The Unions are particularly concerned that during the
pre-hearing negotiations, the Management of Bord Na
Mona sought to unilaterally disregard the yield of the
Wage League Table, which is the counter-part of the
Wages League Agreement which facilitates on-going
change. While this Agreement is in place in relation
to on-going change, the compensatory elements must also
remain in place. Otherwise a dispute situation is
unavoidable.
(xiii) Unless Management abides by the Wages League Agreement,
the industrial relations scene will become very sour
very soon. This Agreement was approved by the Labour
Court. Under the Conciliation Agreement, it represents
the final stage of the Conciliation process, whenever
improved pay levels emerge from it.
(xiv) There have been several Wages League adjustments in the
industry since 1979. All of the elements in the Wages
League Table have already been individually approved
for payment within the public sector.
(xv) Last year, when the industry was in crisis, the
immediate future of the industry was salvaged by the
workforce (who worked to the point of exhaustion last
Autumn) and by the Unions, who initiated a salvage
package which avoided a confrontation and resulted in a
good working relationship which was of very great
benefit to the industry. (Unfortunately Management
attempted to short-change the production workers in the
operation of this Agreement over Christmas, 1986).
(xvi) The Court will have noted that, over time, the
financial position of Bord Na Mona, at the out-turn
stage, is never as bad as the canvas painted by the
Board before the Labour Court.
Bord's arguments:
5. (i) The grounds for seeking a pay pause at this time is
based on the financial position of the Company. These
grounds are equally true whether the claim be for a
round increase or relativity increase.
(ii) The Unions are claiming that the league table
adjustment should be conceded automatically because it
formed the basis of the increase conceded under the
relativity/productivity agreement in 1979. The last
occasion on which a relativity wage adjustment was
conceded on the basis of the league table, was in 1984,
when the Labour Court recommended that the second phase
of the 23rd wage round be "an adjustment deriving from
the regular analogues effective from 1st February,
1984" (Recommendation No. 8330 refers).
(iii) In that submission to the Labour Court for the 23rd
round claim in 1983, the Unions stated that "the wages
league has compensated for changes in re-organisation
of work, and work methods, and in significant changes
in mechanisation and has enabled Bord Na Mona to
modernise the production operations and techniques with
the added advantage to the industry of industrial
peace." The practice has been, however, that when any
particular changes were necessary specific compensation
had to be paid in order to maintain industrial peace.
(iv) The emphasis in the Company's case at this time is the
substantial losses which have resulted from two
successive bad summers of 1985 and 1986. The financial
accounts in respect of those years show losses of #17.6
million and #15.8 million respectively and the budgeted
accounts for the current year could only be considered
as a break even situation assuming that 100% of targets
are achieved. Faced with such a situation it would be
imprudent of management to consider any further cost
increasing claims at least until the end of the
production season when it would at least be known what
stocks were available for sale.
(v) The effect of the two bad summers not only resulted in
financial losses in the accounts of the years in
question but also depleted the saleable reserves of
peat on the bog. This makes the current year a
critical one, even with the achievement of 100% of
targets.
(vi) The Unions are well aware that Bord Na Mona is obliged
to operate on a commercial basis and must service its
borrowings which at present stand at #156.4 million.
The interest charges on this is payable every year
irrespective of the weather conditions and the
financial outturn.
(vii) During better times the workers have benefited through
relativity/productivity increases in addition to the
round increases. Now that the company is going through
a difficult period it is only reasonable to expect that
the employees should be asked to show restraint. This
is particularly true in a labour intensive industry
where the wages and salaries account for almost 60% of
the total costs.
(viii) Bord Na Mona is dealing with a wasting asset and many
of the production areas are approaching the end of
their life. This being so, there is a continual need
to develop new areas or projects if the Company is to
maintain employment into the future. Such new
development or projects require input of capital money.
Ideally this should be generated from within the
Company itself through profits, if it is to remain
viable. If Bord Na Mona was to continued making losses
for whatever reason, not only would it be a poor risk
for any lender of capital but it could also put itself
in a situation in which it might not be able to avail
of grants from the E.E.C. Valoren programme, which
requires Bord Na Mona to contribute 45% of the cost of
the projects in order to avail of the grants.
Claim (b) : shorter working week:
Background:
6. The workers operate on the basis of a 40 hour working week.
The Group is claiming a reduction in this. The Bord rejected the
claim.
Union's arguments:
7. (i) The claim is in line with I.C.T.U. policy and in line
with the trend towards a shorter working week within
the E.E.C.
(ii) Apart from improving the working conditions for the
workers directly benefiting from the concession of the
claim, a shorter working week would contribute to a
reduction in the appalling level of unemployment and
the creation of some new employment opportunities for
the jobless and school leavers.
(iii) A shorter working week is now particularly appropriate
to Bord Na Mona in view of increased productivity and
the declining employment requirements in the industry.
Board's arguments:
8. (i) The hours of work in Bord Na Mona are not out of line
with comparative employments.
(ii) Any reduction in basic hours would constitute a direct
additional cost which the employment cannot afford.
RECOMMENDATION:
9. The Court has considered the issues raised by the parties in
their submissions to it and recommends as follows:
26th Round Increase
The Court recommends an initial pay pause of 3 months, followed by
a payment of an increase of 4% in respect of an agreement to last
15 months in total.
Common Starting Date
The Court does not recommend concession of this claim.
Operation of Analogue Arrangement
Having regard to the financial upsets to the Board deriving from
two successive bad summers in 1985 and 1986 the Court does not
consider it appropriate that any adjustment to wages should be
made under this heading at the present time.
Shorter Working Week
The Court does not recommend concession of this claim.
~
Signed on behalf of the Labour Court
John O'Connell
_________________________
Deputy Chairman.
27th August, 1987.
T.O'M./J.C.