Labour Court Database __________________________________________________________________________________ File Number: CD87525 Case Number: LCR11498 Section / Act: S67 Parties: TARA MINES - and - CRAFT GROUP;AEU;ETU |
26TH WAGE ROUND
Recommendation:
11. (a) Wage Increase:
The Court, having given careful consideration to all the
arguments of the parties at the hearing of the case and
in the subsequent correspondence and having regard to
the need to maintain continuity of employment,
recommends that, in the context of a 14 month agreement,
basic rates be increased by 3.5 per cent with effect
from 1st June, 1987.
(b) Other Claims:
The Court does not recommend concession of the Unions'
other claims.
(c) Cost Reduction Plan:
The Court recommends that the Company's proposals in the
cost reduction plan be accepted. However, in devising
the new bonus scheme the Company should withdraw its
claim that there be an upper limit on earnings over any
given period and the Unions' should agree that the rate
of increase in bonus earnings should be constant over
the whole range of possible outputs.
Division: CHAIRMAN Mr McHenry Mr O'Murchu
Text of Document__________________________________________________________________
CD87525 THE LABOUR COURT LCR11498
CC87854 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11498
Parties: TARA MINES LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
CRAFT UNION GROUP
(A.E.U., E.T.U., N.E.E.T.U., U.C.A.T.T.)
Subject"
1. 26th wage round and cost reduction plan.
Background:
2. The 25th wage round for the workers expired on 31st October,
1986. The Unions' on behalf of 160 craftsmen served a claim on
the Company in respect of the 26th wage round as follows:
- a 10% increase in pay for a twelve month agreement;
- a reduction in the working week without loss of pay;
- a continued intake of conventional apprentices;
- two extra days annual leave;
- all overtime at the rate of double time.
3. The Company issued a notice (dated 8th January, 1987) to all
employees containing a review of the Company's operations and
future prospects. It also contained a cost reduction plan
including a pay pause, changes in work practices, bonus payments
and a reduction in the number of employees through voluntary
redundancy (details supplied to the Court). At a local level
meeting held on 9th January, 1987 the Company put forward details
of the proposed cost reduction plan which it said was designed to
improve the Company's ability to operate continuously when metal
prices are low.
4. On the 22nd January, 1987 the Company issued a further notice
outlining in more detail its proposals in relation to the cost
reduction plan. (See appendix A for details).
5. Local level meetings took place in January, March and April,
1987 and on 26th May, 1987 the matter was referred to the
conciliation service of the Labour Court. A conciliation
conference took place on 24th June, 1987 at which no agreement
could be reached and on 1st July, 1987 the matter was referred to
the Labour Court for investigation and recommendation. The Court
investigated the dispute on 26th August, 1987. At this hearing a
copy of a further memorandum (dated 25th August, 1987) being
issued to all employees was presented (details supplied to the
Court). This related to labour costs in the Company, the effect
of conceding pay increases, requirement for the Company to
implement the cost reduction plan in order for the Company to be
viable, etc. Further correspondence was sent to the Court by the
employer on 25th September and 14th October, 1987 and by the AEU
on 14th September, 1987.
6. The Company's position is that unless the cost reduction plan
is implemented in full the Company will be in extremely serious
financial condition during the coming recession and will not be
able to continue operations during periods of low metal prices.
The Company believes that the workers are excessively well paid
and it cannot agree to any further labour cost increases.
7. The Unions' position is that its wage claim is being pursued
and regarding the proposed changes to the plant bonus scheme, the
Unions' reject the imposition of ceilings and are seeking a 10%
increase in bonus payments based on an increase in productivity of
21.8% at a production target of 2.6m tonnes.
8. Matters in relation to work practices and redundancy have been
resolved or are being discussed at local level.
Union's arguments:
9. (a) The Company was purchased by a state owned Finnish
mining company in 1986 for #70 million. In that year
they had an investment budget of #230 million and a
turnover of #1.2 billion and in 1985 the operating
profit was #80 million
(b) The basic pay of the workers has deteriorated since
1977 compared to the rate of inflation in the same
period and to pay in other companies (details supplied
to the Court).
(c) In the present unemployment situation reduced working
hours can make a significant contribution to creating
additional employment. Other countries have reduced
working hours (details supplied to the Court).
(d) Since its foundation, the Company has always employed
six apprentices each year. This practice was
discontinued last year. As a Company employing a large
number of craftsmen it has a duty to maintain a pool of
skilled labour. The State has had to reduce its level
of involvement in training and employers such as this
Company must accept their responsibilities in training.
(e) The craftsmen work a four cycle shift over seven days
and an increase in annual leave due to this and the
working environment is justified. Most european
countries have better holiday entitlements than exists
in this Company (details supplied to the Court).
(f) When a forty-eight hour week was worked with Sunday as
the day off, double time was paid for overtime on
Sunday. The working week was reduced further later and
double time was paid for working on Saturday
afternoons. A five day week is now in effect and the
anomaly of being paid T+.50 for working on Saturday's
till midday remains, this situation should be rectified
and all overtime should be paid at the rate of double
time.
(g) The Company's proposals in relation to the bonus scheme
are unacceptable. If a ceiling is put on bonus
payments the workers will lose money. Under the
Company's proposals and based on their target of 2.6m
tonnes production in 1987 each worker would lose #800
and applying this ceiling to last year's production
level of 2.517m tonnes, the loss would have been almost
#500 per worker. The present bonus scheme arose from a
Labour court Recommendation in 1982 after a strike
period and lengthy discussions. It is only in the last
couple of years that the scheme has yielded significant
results for the workers. An increased production of
2.6m tonnes achieved by a reduced workforce (150 less)
represents an increase in productivity by the workers
of 21.8%. Therefore bonus payments to the workers
should be increased by 10%. This could be achieved by
lowering the daily average targets by 10% (details
supplied to the Court).
Company's arguments:
10. (a) Costs in the Company, in particular labour costs and
therefore production costs are too high. When metal
prices are not at the appropriate level and the dollar
to the pound is not at a reasonable rate the Company
cannot operate. It is necessary that labour costs do
not increase and that other cost reductions and
efficiency improvements are made for the Company to
become viable. The Company has made it clear at all
times that the proposals in the plan had to be
implemented as a package if they were to be effective.
(b) When the Company began operations in 1973 a very
substantial amount of money was borrowed, 20% of which
is still owing ten years later. The Company's auditors
have prepared a report which consists of an analysis
of: 1986 financial results; 1987 financial
projections; and an analysis of employee costs (details
supplied to the Court). The Company incurred mining
operating losses during 1986 and during the first half
of 1987. Based on current costs and with no increases
in labour costs and with a reduction in the workforce
(as outlined in the Plan) together with projected metal
prices and planned production levels the Company is
expected to incur a mining operating loss during 1987
(details supplied to the Court).
(c) The Company is in a poor financial condition due to
high operating costs and cannot consider any cost
increases. The Tara Plan was prepared in order to
achieve a significant reduction in operating costs per
tonne. This would be achieved by: purchasing new
equipment; reducing prices paid and usage of parts and
supplies; increased labour productivity; and a pay
freeze and changes to current bonus scheme.
(d) In the circumstances, the Company must continue with
all efforts to reduce costs and improve production.
Further improvements are needed in 1987 and 1988 to
enable the Company to operate during periods of low
metal prices. The Company has spent a substantial
amount of capital expenditure in order to modernise the
plant and equipment. Such changes and others which are
necessary in order for the Company to be viable must be
accompanied by a greater degree of co-operation by the
workers in the re-organisation of work at the mine.
Pay and bonus rates will have to be established at
economic levels and improved work practices introduced.
The changes proposed by the Company should result in
the necessary performance levels to restore the
economic viability of the mine.
(e) The Company has commissioned a number of surveys on
labour costs (details supplied to the Court). These
show that: the workers have received a substantial
increase in total earnings during the last six years;
pay and conditions of employment are very favourable
compared to other Irish companies; the Company has
conceded larger pay increases than other companies
particularly during the 23rd, 24th and 25th pay rounds,
resulting in high labour costs to the Company; compared
to an international cross section of other underground
lead/zinc mines the Company will have higher operating
costs during 1987 and the cost to the Company of each
employee is almost the highest in the worlds mining
industry. These reports also show that the Company's
labour costs have become uncompetitive and will have to
be reduced if the Company is to be able to operate in
the future.
(f) The present pay rates of the workers are twice the
average industrial wage rate and equal to the highest
paid in the international mining industry. The
auditors in their July, 1987 report to the Company
prepared an estimated cost of conceding these claims
(details supplied to the Court). This cost would be
substantial and just taking a 10% pay increase for all
workers employed at the end of 1987 would amount to
approximately $2.8 m (approx. #1.9m).
(g) When the present bonus scheme was established it was
never envisaged that the top level of tonnage would be
achieved and the level of bonus paid is therefore
disproportionate. The cost of producing 2.52m tonnes
is #2,075,270 and the cost of producing the 1987 target
of 2.6m tonnes would be #2,748,043. Therefore, in the
present structure of the scheme for an increase
in production of 3.2% there is an increase in costs of
32%. It would then be uneconomical to produce above
2.52m tonnes. It is essential that a limit is put on
payments under the bonus scheme at 2.52m tonnes per
annum and that one plant bonus scheme is introduced.
RECOMMENDATION:
11. (a) Wage Increase:
The Court, having given careful consideration to all the
arguments of the parties at the hearing of the case and
in the subsequent correspondence and having regard to
the need to maintain continuity of employment,
recommends that, in the context of a 14 month agreement,
basic rates be increased by 3.5 per cent with effect
from 1st June, 1987.
(b) Other Claims:
The Court does not recommend concession of the Unions'
other claims.
(c) Cost Reduction Plan:
The Court recommends that the Company's proposals in the
cost reduction plan be accepted. However, in devising
the new bonus scheme the Company should withdraw its
claim that there be an upper limit on earnings over any
given period and the Unions' should agree that the rate
of increase in bonus earnings should be constant over
the whole range of possible outputs.
~
Signed on behalf of the Labour Court
30th October, 1987 John M Horgan
UM/PG Chairman
APPENDIX A
COMPANY'S NOTICE OF 22ND JANUARY, 1987
PROPOSAL UNDER COST REDUCTION PLAN
A. Pay
There will be no pay increases from the expiry of the 25th
Wage Round, October 31, 1986 until December, 1987, a total of
14 months. This means no increases on basic wages, bonus
schemes, differentials or merit increments.
B. Plant Bonus
(a) The upper payment on plant bonus would be limited to
the equivalent rate of 2.52m dmt of mill feed per year.
This is equivalent to a maximum of 6,981 dmt per day
during 1987.
(b) (i) There will be one plant bonus scheme to cover all
those who receive payments under the heading of
plant bonus.
(ii) The staff augmentation will no longer apply.
However, staff who are entitled to overtime
payments would receive bonus on overtime hours
worked.
C. Bonus Payments to Miners
The current bonus schemes are complex and difficult to
implement or monitor. The current rates would be adjusted to
provide a single rate for all the activities currently
carried out under each scheme. This will permit greater
flexibility and utilisation of resources in carrying out the
variety of activities conducted by Miner I's throughout the
operation. As new equipment is introduced a revision of
existing standards would take place, however the additional
productivity will not have a negative impact on existing
bonus earnings but will not necessarily lead to any
increases.
D. Work Practices
Flexibility is required in employees duties in line with new
equipment and or technology which will be introduced. This
would include the setting up of a transportation system for
underground employees to travel to and from the Mine Dry to
designated places underground. This will supplement the
shaft system as the means of transporting employees and will
be run on a scheduled basis throughout each shift.
There will also be a general tightening of time-keeping,
especially with regard to the start/finish of tea breaks and
work periods.
Certain changes in current work practices are considered
essential, but not necessarily limited to the following:
1. Mine