Labour Court Database __________________________________________________________________________________ File Number: CD87163 Case Number: LCR11143 Section / Act: S67 Parties: NATIONAL OFFSHORE DRILLING IND - and - ITGWU |
Claim (a) Wage Increase. Claim (b) Introduction of a log-book system. Claim (a)
Recommendation:
8. The Court has carefully considered the submissions of both
parties in this case and has some difficulty arriving at a
conclusion insofar as there seems to be little common ground
between the parties as to the impact on the industry of any
increase in wage costs.
What seems clear to the Court is that the Employers consider it is
necessary to take both comparisons with the North Sea conditions,
and comparisons with national movements of wages and salaries into
account. In this respect, it seems obvious that in general terms
as a basis for international comparison, if the cost of equipment
hire is falling, the wage and salary element of such costs must be
subject as a result to greater pressure from international
competition and therefore a cause of concern to workers involved.
On the other hand the Employers, whilst reporting voluntary wage
freezes amongst North Sea workers, should accept that as a result
of this Court's recommendation last year, they have already, in
effect, had the benefit of a freeze or its equivalent. While the
income of the workers involved may still be high by comparison
with North Sea workers it would be unrealistic to expect a
continued standstill against the background of domestic wage
movements.
On balance therefore the Court, taking account of the additional
costs incurred by the Employers in introducing a pension scheme,
and the necessity to avoid a further undue increase in costs,
recommends an increase of 3% in wage rates for the current season.
The Court further recommends the introduction of the log book as
drafted by AnCO without further delay.
Division: Mr O'Connell Mr Collins Mr O'Murchu
Text of Document__________________________________________________________________
CD87163 THE LABOUR COURT LCR11143
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11143
Parties: NATIONAL OFFSHORE DRILLING INDUSTRY
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claim (a) Wage Increase.
Claim (b) Introduction of a log-book system.
Claim (a)
Background:
2. Wages were not increased in 1986 for the workers here
concerned (Labour Court Recommendation 10817 refers). The Union,
on behalf of the workers are now seeking 10% pay rise for 12
months to compensate for the absence of a wage rise in 1986, as
well as taking into account the current level of wage increases.
Agreement could not be reached on the matter of a pay rise at
local level. The Employers sought another pay pause for this
year, arguing that the off-shore industry could not bear a wage
increase. This position was not acceptable to the Union. On 3rd
February, 1987, the matter was referred to the conciliation
service of the Labour Court. A conciliation conference took place
on 12th February, 1987. No agreement was reached and on 4th
March, 1987, the matters of the wage increase and the introduction
of a log book for the industry was referred to the Labour Court
for investigation and recommendation. A Court hearing took place
on 2nd April, 1987.
Union's arguments (a)
3. (i) Increases in the Consumer Price Index since 1985 have
resulted in a real decline in the value of pay to the
workers concerned at a time when they experience longer
and longer periods of unemployment because of reduced
drilling activity. For casual workers whose sole
occupation is off-shore exploration work, this is a
burden which they can ill afford to carry. When
considered in conjunction with unemployment periods of
eight, nine or ten months of the year, it produces
exceedingly low levels of remuneration.
(ii) Whilst there are major cutbacks in the North Sea, this
has relatively little to do with the drilling programme
in Ireland, which is determined on the basis of holes
contracted. The drilling last year was as per the
drilling programme agreed, and this year is likely to
be somewhat similar. An average wage settlement paid
to off-shore workers would not discourage the major oil
companies from proceeding with the drilling of a
particular well. The Labour cost element in oil
production is a relatively minor one when compared with
the overall budgets involved and the likely benefits
which accrue to a company which identifies a worthwhile
oil or gas field.
(iii) The Employers have tried to create the impression that
there is an enormous difference in the earnings of
Irish workers and their counterparts in the North Sea.
This comparison is entirely false, and takes no account
of the difference between a country where six or seven
wells may be drilled in a year, (which is the case for
this country), and the North Sea where drilling is
virtually continuous. When income tax and living costs
are taken into account, the comparison is further
weakened. The very short periods worked by the Irish
workers must also be taken into account.
(iv) The Union has always maintained that the only fair
comparison for these workers is with pay and conditions
of employment negotiated nationally in the better paid
employments. The Court will be aware that increases of
more than 6% have been conceded in a considerable
number of employments (details supplied to the Court).
(v) The Employers have also argued that concession of the
pension scheme, which involved a contribution of 2.75%,
should be offset against any proposed wage increase.
However, a contribution of 2.75% which has been in the
offing since 1982 and is only now being applied in
1987, is exceptionally low by today's standards. Most
worthwhile pension schemes require a funding rate of
between 12 and 18% of pensionable salary and some cost
a great deal more than this. Employers generally pay
approximately 2/3 of the costs of such pension which
would equate to between 8 and 12% of pensionable salary
for pension provisions.
(vi) Given the uncertainty in this Industry, the hazardous
nature of the work and the relatively short life span
during which the workers can expect to be employed, it
is unacceptable that the workers should sustain real
losses in their earning power. A second
year without a pay increase would be completely
unacceptable and would give rise to serious industrial
relations problems in the Industry. When
this is combined with other efforts of the Employers to
undermine conditions of employment, achieved over many
years, it could have very damaging consequences for
this sensitive industry.
(vii) The Union wishes the drilling season to be trouble
free. It urges the Court to give positive
consideration to the Union's representations, to ensure
that the workers receive no less favourable an increase
than their counterparts in other national industries.
Such a decision by the Court would not have damaging
consequences for the industry, but will help to ensure
stability and good industrial relations during the
short drilling season.
Employers' arguments:
4. (a) Since the Court investigated the pay rates of the Irish
exploration industry in October, 1986 (Labour Court
Recommendation 10817 refers), the crisis in the
industry has worsened. The industry cannot contemplate
any increases in Labour costs other than the agreed
costs of implementation of the pension scheme, which
the Court recommended. In 1987 there are more
compelling reasons in support of the Employers
inability to make any concession on pay rates.
(b) 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 they are part of this
international industry and have 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 purpose of obtaining
improved pay and conditions. Offshore operations in
Ireland cannot be immune from the international
economics of the industry and its consequent
repercussions.
(c) The industry is no longer profitable and is
endeavouring to survive in an extremely critical
environment created by the continuing severe recession
in the oil industry (details supplied to the Court).
(d) Exploration originating from Irish bases is mainly
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 fortunate enough to be remaining in work. There
have also been a substantial number of redundancies.
These cut-backs have been implemented with the
objective of protecting as many jobs as possible.
Furthermore, pay rates have not been increased for 1987
in the North Sea.
(e) The Employers reject any argument that Irish workers
are underpaid for the tasks performed, e.g. a day cook
earns at the rate of #22,080 per annum plus holiday pay
and completion bonus. 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
supplied to Court).
(f) Against this background the Irish exploration industry
cannot see any justification for increasing the
earnings of Irish exploration workers this year.
Traditionally, when a rig contractor operates in a
foreign country he can normally expect to use local
labour at less expense than his home labour. Ireland
must be one of the very few places in the world, and
perhaps it is unique in this, where local Irish labour
is significantly more expensive than the home labour of
the contractor. This is of major significance when the
work performed is exactly the same, very often on the
same rig, in the same environmental conditions and
requiring the same standards of training, experience
and qualifications. There is a huge disparity in
earnings in favour of the Irish personnel. It is
significantly cheaper to operate exploration rigs from
United Kingdom bases.
(g) To ensure the maximum number of job opportunities for
Irish workers in the years ahead it is vital that the
unreal labour cost comparisons which now exist should
not be further widened, and the Court is requested to
reject the Union's claim. Indeed a strong case exists
for a reduction in Irish pay rates which would bring
some semblance of reality to Irish labour costs and
which would possibly lead to greater employment
opportunities.
Claim (b) Introduction of a log book system
Background
5. Since 1985 discussions have been ongoing between the Union and
the Employers on the introduction of a log-book system for
off-shore workers. Agreement in principle has been achieved, and
both sides have acknowledged the potential benefit of a log-book
system for off-shore workers. Negotiations broke down however, on
the Employers insistence that the log-book should contain a record
of the workers medical history, accidents, and reasons for
termination of employment. The Union points out that the
Employers may keep these records of their own accord, but fears
that to include such material on the log book would be contrary to
the interests of the workers.
Union's arguments
6. (i) Given the casual nature of the industry and the changes
that are taking place a log book system similar to that
applying at present to seamen would be beneficial to
all concerned.The issue before the Court arises from
the Employers insistence that such a log-book system
would contain data of a sensitive nature, relating to
such matters as accidents, illnesses and termination of
employment.
The Union has pointed out consistently that such
records should be kept by the Employers themselves and
should not have any bearing on a log book system which
would be personal to the worker concerned and would in
fact be his property.
(ii) In view of the fears of the workers about how a new
system such as a log book system might be abused by the
Employers and become a controversial issue in the
industrial relations sphere, the Union asked the
Employers to agree to the introduction of the logbook
as a system of record for experienced personnel in the
industry, to document the length of time they worked,
the installations on which they worked and the various
categories in which they performed duties or gained
particular expertise. It will also be useful in
documenting courses attended or certification secured
and could also be useful in recording a pension number
and contributions to the pension scheme now that such a
scheme is to be introduced this year. The insistence
of the Employers on such matter as medical records
(even absences for incidental illnesses) and their
emphasis on reasons for discharge, brought about a
reaction from the workers. This was seen to be linked
with the ongoing issue of recruitment and the Employers
many attempts to undermine seniority, the Union list
system in the individual branches, and the present
requirements to give reasons where a particular worker
is passed over for employment.
(iii) A seamans book is quite a familiar document in the
off-shore industry and is accepted internationally as a
useful mechanism for documenting the work record of a
sea-farer. We see no reason why the off-shore drilling
industry should require anything more detailed or
controversial than that when introducing a system of
record for experienced workers.
Employers' arguments:
7. (a) At a conference held on 4th March, 1987, the Union
agreed to implement the log books on a national basis
provided that the content was further diluted by
removing all reference to medical certification. The
Employers could not accept this condition as it would
render the log book system somewhat meaningless.
(b) The objective of the log book system is to validate all
relevant information covering work experience, training
and medical history for the mutual benefit of
prospective employers and employees. To allay any
fears which the Union might have the Employers
undertook not to cite the log book against any worker
in the event of disciplinary action being taken. The
Employers also confirmed that the log book would not
prejudice, in any way, the established negotiating and
grievance procedures.
(d) In the light of these assurances, given freely by the
Employers, there is now no valid reason why the
attached log book system should not be introduced and
we request the Court to so recommend.
RECOMMENDATION
8. The Court has carefully considered the submissions of both
parties in this case and has some difficulty arriving at a
conclusion insofar as there seems to be little common ground
between the parties as to the impact on the industry of any
increase in wage costs.
What seems clear to the Court is that the Employers consider it is
necessary to take both comparisons with the North Sea conditions,
and comparisons with national movements of wages and salaries into
account. In this respect, it seems obvious that in general terms
as a basis for international comparison, if the cost of equipment
hire is falling, the wage and salary element of such costs must be
subject as a result to greater pressure from international
competition and therefore a cause of concern to workers involved.
On the other hand the Employers, whilst reporting voluntary wage
freezes amongst North Sea workers, should accept that as a result
of this Court's recommendation last year, they have already, in
effect, had the benefit of a freeze or its equivalent. While the
income of the workers involved may still be high by comparison
with North Sea workers it would be unrealistic to expect a
continued standstill against the background of domestic wage
movements.
On balance therefore the Court, taking account of the additional
costs incurred by the Employers in introducing a pension scheme,
and the necessity to avoid a further undue increase in costs,
recommends an increase of 3% in wage rates for the current season.
The Court further recommends the introduction of the log book as
drafted by AnCO without further delay.
~
Signed on behalf of the Labour Court
John O'Connell
__________________________
Deputy Chairman.
5th June, 1987.
P.F./J.C.