Labour Court Database __________________________________________________________________________________ File Number: CD87635 Case Number: LCR11427 Section / Act: S67 Parties: PAKO (EUROPE) LTD - and - ITGWU |
27th Wage Round.
Recommendation:
5. Having considered the submissions of the parties and the
further evidence presented in respect of the present circumstances
in which the Company is operating the Court is of the opinion that
for the immediate future it is in the interest of all concerned
that cost increasing claims be strictly modified. Accordingly the
Court recommends that the Company offer:
(a) an increase of 2% with effect from 1st August, 1987,
(b) a further increase of 2.5% with effect from 1st
February, 1988,
in respect of an agreement to terminate on 30th September, 1988
and that the offer be accepted by the workers concerned.
Division: Mr O'Connell Mr McHenry Mr Devine
Text of Document__________________________________________________________________
CD87635 THE LABOUR COURT LCR11427
CC87718 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11427
Parties: PAKO (EUROPE) LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. 27th Wage Round.
Background:
2. The Company which manufactures photographic processing
equipment is the subsidiary of an American Company, and was set up
in Raheen, Limerick in 1980. The workforce totals approximately
170 people. Short time working has been in operation in the
Company since January, 1987. In March, 1987, the parent Company
in the United States sought protection under Chapter 11 a
provision in U.S. law which affords protection to a company that
might otherwise be forced into liquidation. The Irish Company is
now the sole manufacturing plant, with the U.S. Company reduced to
60 workers engaged in sales and research and development. The
25th round expired in the Company on 31st October, 1986. At a
meeting with the Company on 2nd December, 1986, the Union outlined
its claim for the 26th wage round: An increase of 14% to cover 12
months, an improvement of the Christmas bonus to #250 against the
current bonus of #125, plus one additional days leave after five
years' service. The Company responded by stating that it was in
precarious financial position and was making losses (details
supplied with the Court). The Company stated that it had not
money to fund a wage increase, and that a pay freeze for 1987 was
vital to the Company's prospects of survival. Agreement could not
be reached at local level, and on 3rd April, 1987, the matter was
referred to the conciliation service of the Labour Court. A
conciliation conference took place in Dublin on 14th May, 1987
following negotiations, the following final positions emerged.
Union
01.11.86 - 31.07.87 - 3% 9 mths
01.08.87 - 31.10.87 - 4% 3 mths
01.11.87 - 31.03.88 - 4% 5 mths
01.04.88 - 31.10.88 - 4% 7 mths
Company
01.11.86 - 31.07.87 - Pay Pause 9 mths
01.08.87 - 31.01.88 - 2% 6 mths
01.02.88 - 31.10.88 - 2% 9 mths
No further progress was possible, and on 18th August, 1987, the
matter was referred to the Labour Court for investigation and
recommendation. A Court hearing took place in Dublin on 28th
August, 1987.
Union's arguments:
3. (i) When Pako set up in Limerick in 1980 the wage rates
paid were in line with those obtaining in the area.
Since then they have gradually fallen back. The
Company state that over the past five years they have
sustained significant losses. One of the reasons seems
to be that when the parent corporation ceased
manufacturing operations in the U.S.A. the Limerick
plant being the only manufacturing unit, has to finance
the American operations where there are still 60 people
employed. On this basis, there will be an ongoing
drain on the Limerick plant and wages will remain
depressed indefinitely. This is simply not acceptable.
(ii) In being asked to accept a wage freeze, the workforce
are being asked to accept too much. Living standards
have been completely eroded and continue to fall, and
the workers purchasing power continues to drop.
Already twenty people have vacated the Company, because
they simply could not afford to stay.
(iii) The Union is aware of the economic and trading
difficulties of the Company. However, it is the
widespread view of the workers that a wage increase
must be provided for in 1987. The workforce simply
cannot afford to forego an increase in its wages. The
vast majority are young people with financial and
mortgage repayments to meet, and are finding it
extremely difficult to live. For many, it is simply a
question of survival.
(iv) The workforce in the Company have been very flexible
and adoptive. They have co-operated through several
stages of week on/week off working, and continue to
experience a great deal of uncertainty and instability
in their working lives. Considerable savings have been
achieved by the Company by the non replacement of
workers who have left at all levels. Those who left
have been paid statutory terms only.
(v) Ireland, as a location for foreign companies is still
very attractive for investors. From surveys carried
out in recent years it has been confirmed that given a
second choice to relocate the majority would invest
again in Ireland if given the decision. The argument
that the cost of wages is making us uncompetitive and
unattractive for investment is not longer acceptable as
wages are but a very small factor in costing. The
major costs are in materials and parts and in their
proper utilisation.
(vi) The Union understands that the Company has a good
product with good potential markets. With all the
indications pointing towards a recovery in the level of
manufacturing output nationally as confirmed by the
I.D.A.; E.S.R.I. and the Central Bank recently, the
level of output of the manufacturing sector is likely
to increase by a round 5.50%. It is accepted of course
that in order to avail of the upturn in industrial
exports, a Company must be geared in that direction.
Apart from other considerations, it goes without saying
that unless the workforce are granted a wage increase
all their skills will be lost to the Company as they
cannot exist without a wage increase and will be forced
to leave. The Union request the Court to grant an
increase to cover the 26th wage round.
Company's arguments:
4. (a) The Company is struggling for survival in attempting to
cope with the combined effects of a cash flow crisis,
lack of profitability and reduced product demand. It
must be recognised that, in this situation, the
Company's ability to fund any cost increase is
seriously impaired. The cash flow crisis alone would
make the funding of any retrospective increase
impossible.
(b) The Company has dealt fairly with employees in
difficult times in the past, by providing wage
increases well up to the average. However, its
situation is far more critical on this occasion.
(c) The Company's wage rates are quite competitive and are
the result of the policy adopted by the parent company
when it set up the Irish operation. This policy
reflected the then profitable position of the Company
but has become increasingly more difficult to sustain a
losses mount.
(d) Everyone must contribute if the Company is to succeed
in overcoming the crisis which it now faces. The
contribution from all employees, including the
unionised workforce, must include a moderation of
expectation, as well as maximum efficiency and
co-operation. In this regard, a nine month pay freeze
is currently in operation for all the Company's
non-unionised staff.
RECOMMENDATION:
5. Having considered the submissions of the parties and the
further evidence presented in respect of the present circumstances
in which the Company is operating the Court is of the opinion that
for the immediate future it is in the interest of all concerned
that cost increasing claims be strictly modified. Accordingly the
Court recommends that the Company offer:
(a) an increase of 2% with effect from 1st August, 1987,
(b) a further increase of 2.5% with effect from 1st
February, 1988,
in respect of an agreement to terminate on 30th September, 1988
and that the offer be accepted by the workers concerned.
~
Signed on behalf of the Labour Court
John O'Connell
_______________________
Deputy Chairman.
30thOctober, 1987.
P.F./J.C.