LCR11394

Subject:
Claims under the 26th wage round for: (a) A 10% increase on basic pay, (b) A shorter working week and, (c) An extra day's annual leave.

Recommendation:
5. Having considered the submissions of the parties and the
current position of the company the Court does not consider an
immediate recommendation is appropriate and proposes to review
the claim in November in the light of the circumstances then
prevailing.

Division: Mr O'Connell Mr Collins Mr Devine

Text of Document__________________________________________________________________

CD87541 THE LABOUR COURT LCR11394
CC87638 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11394


Parties: BUTTLES BACON COMPANY
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)

and

IRISH TRANSPORT AND GENERAL WORKERS' UNION


Subject:

1. Claims under the 26th wage round for:

(a) A 10% increase on basic pay,

(b) A shorter working week and,

(c) An extra day's annual leave.

Background:

2. The Company employs 61 people in Enniscorthy, and is engaged
in the killing and processing of pigs for sale as bacon and pork.
The Company was taken-over by new owners in 1984, prior to which
it had been working a 3 day week. The 25th pay round expired in
the Company on 31st December, 1986. The Union, on behalf of the
workers, served a claim on the Company for the following:

(i) A 10% increase on basic pay for 12 months from 1st
January, 1987.


(ii) A shorter working week. A gradual reduction towards an
ultimate objective of a 35 hour week is being sought.

(iii) Two extra days annual leave.



The Company because of its financial situation, sought a pay
pause until the first of January, 1988. A kill bonus is in
operation in the factory of #5 per man per 100 killed in excess
of 1200 animals. The Company sought modification of this kill
bonus, stating that it made it uncompetitive and loss making to
operate at kill levels over and above 1200/1300. Such
modification could however, not be agreed upon. Agreement was
not reached on any of the issues at local level and on 22nd
April, 1987 the matter was referred to the conciliation service
of the Labour Court. A conciliation conference took place on
28th April, 1987. No agreement was reached and on 7th July,
1987, the matter was referred to the Labour Court for
investigation and recommendation. A Court hearing took place in
Dublin on 24th August, 1987.

Union's arguments:

3. Claim A.

(i) The national trend on wage movements during the
currency of the 26th round is very clear and
incontrovertible. From a total of 560 settlements
monitored by the Union's research department,
(involving a total of 62, 524 workers) an average
increase of 6.1% over a 12 month period emerged. In
terms of the national average, the Labour Court itself
has continuously issued recommendations consistent with
this norm.


(ii) The Union's approach is fully in line with the Irish
Congress of Trade Unions' policy of seeking to secure
pay increases which will project the real value of
wages and help restore the workers' living standards.
The Union also seeks to provide some protection against
inflation and the effects of tax and P.R.S.I.
deductions on take home pay.

(iii) Having accepted a five month pay pause in the 25th
round settlement, the workers are adamant that they
will not entertain the inclusion of a pay pause in any
settlement proposed for the 26th round, as this would
only contribute to a further erosion of living
standards.

Claim B. A Shorter Working Week

(i) Present weekly working hours are 40. Many Economists
now agreed with the National and International
viewpoint that an important consideration in any policy
designed to save and create jobs, is reduced working
hours. Experience in Europe has borne this out very
clearly (details supplied to Labour Court).

(ii) In Ireland, unemployment has continually increased to
the point where over 250,000 people are now registered
as unemployed. This is on top of a net emigration
figure of 16,000 in 1986, plus thousands of young
people and married women who are seeking work but are
not included in the unemployment figures. Through
collective bargaining the I.T.G.W.U. has succeeded in
reducing the number of hours worked by manual workers
over the 24th, 25th and 26th Rounds (details supplied
to the Court).


(iii) The Union submits that the continuation of a forty hour
week cannot be defended when even one hours work cannot
be provided for a significant section of the workforce.

(iv) A gradual reduction in working hours towards an
ultimate objective of 35 hours per week would be
acceptable here, and the Union is presenting the Court
with an opportunity to make inroads which would be
socially desirable and progressive on this very vexed
issue.

Claim for 2 extra days Annual Leave

(i) The present annual leave entitlement for the workers
covered by this claim is 20 days. Many of the
arguments for a reduced working week apply equally to
annual leave. There is also a need for a greater
amount of leisure time for workers.

(ii) As with weekly working hours, this country trails the
field when compared with European trends (details
supplied to the Court). In terms of developments
within Ireland, there is now a recognition of the
problem, and a growing trend to redress the imbalance.

(iii) In Labour Court Recommendation No. 10328 the Court said
that 21 days leave "is not unreasonable" and rejected a
claim for improvement. An interpretation of this would
mean that less than 21 days is unreasonable. It would
explain how another group of workers was able to argue
successfully for a recommendation for 21 days when they

already had 20 (LCR 11178 refers). There is also a
recent Recommendation (No 11260) on 26th Round claims
which conceded one extra day's holidays in the 1988
leave year.

(iv) As a further argument in support of its view on this
issue, the Union can cite a list of companies with
annual leave in excess of 20 days as a basic holiday
entitlement (exclusive of service).

(v) In conclusion, the Union believes that its claims are
fair and reasonable, and looks forward optimistically
and with confidence to a favourable Recommendation from
the Court.

Company's arguments:

4. Claim A. Wage Increase

(a) As is well-known the pig processing industry is
undergoing rationalisation. Closures have taken place
and another appears to be imminent (details supplied to
the Court). As part of this, proposals are under
discussion which would involve an association of
Buttles with two other companies in the South East,
whereby pig slaughtering would be centralised with
carcasses then moved to three locations for processing.
No final decision has been made by Buttles as to the
ultimate location of its processing operation. This
decision will depend in part on the level of commitment
and co-operation from the workforce in Enniscorthy.
The current operation is not viable - profit of #70,000
in 1986 represents a return on capital invested of 1%.
It is obvious that no company will choose to continue
on that basis alone.

(c) In examining the claim for an increase the key
determinants in this case must be


- that the basic rates of pay in the Company are
higher than those generally applying in the
industry

- that other elements compare favourably with other
companies

- that no other company pays a 'kill' bonus

- that the company is not viable

- that future investment and the location of that
investment will depend, inter alia, on the
approach of the workforce to these issues.

All these key factors support the company's position
that there should be a moratorium on cost increases for
a 12 month period to 1st January, 1988. It is
important to note that there are a number of agreements
reached in the industry (with I.T.G.W.U.) which contain
a 12 month pay pause even where rates are lower than
those in Buttles.


(iii) In order to operate effectively the financial
institutions on which the company depends must have
confidence in the company. This will be influenced by
perceptions of the attitude and commitment of the
workforce. The company, in its turn, will make
decisions based on assessments of the likely viability
of the current, and proposed, operations.

(iv) The first step in encouraging further investment and in
controlling the level of costs in Buttles will be
agreement on the company's position in regard to basic
pay.

(v) Aside from the above considerations the company cannot
afford to pay an increase.

Claims B and C. A shorter working week and an increase in
holidays.

(i) The Company cannot concede these claims for the reasons
already outlined. They are cost increasing claims and
are totally inappropriate to the Company's current
situation.


RECOMMENDATION:

5. Having considered the submissions of the parties and the
current position of the company the Court does not consider an
immediate recommendation is appropriate and proposes to review
the claim in November in the light of the circumstances then
prevailing.
~

Signed on behalf of the Labour Court


John O'Connell

_____________________
Deputy Chairman.
10th September, 1987.
P.F./J.C.