Labour Court Database __________________________________________________________________________________ File Number: CD88406 Case Number: LCR11939 Section / Act: S67 Parties: CARLTON PRODUCTIONS LIMITED - and - FEDERATED WORKERS' UNION OF IRELAND |
Claim by the Union for a Wage Increase under the 27th Wage Round.
Recommendation:
5. The Court has considered the submissions made by the parties
and additional financial information provided by the Company.
Whilst accepting the Company is presently suffering a serious
setback and is currently concerned about the future, the Court
notes the significant co-operation of the staff and has come to
the conclusion that given this continuing co-operation, the
implementation of the terms of the Programme would not be such a
burden as to be insuperable to the Company, even in its present
difficult position. The Court, therefore, recommends that the
terms of the Programme be implemented with effect from 1st
January, 1988.
Signed on behalf of the Labour Court
John O'Connell
-----------------------
7th July, 1988
P.F./U.S. Deputy Chairman
Division: Mr O'Connell Mr Heffernan Mr O'Murchu
Text of Document__________________________________________________________________
CD88406 RECOMMENDATION NO. LCR11939
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: CARLTON PRODUCTIONS LIMITED
(Represented by the Federated Union of Employers)
and
FEDERATED WORKERS' UNION OF IRELAND
SUBJECT:
1. Claim by the Union for a Wage Increase under the 27th Wage
Round.
BACKGROUND:
2. The Company concerned in this case press records and duplicate
tapes mainly for the Irish market. The Union, on behalf of the
workers, claimed the wage terms of the Programme for National
Recovery with effect from 1st January, 1988, when the 27th Wage
Round fell due. The Company are claiming inability to pay. It
says that the bottom has fallen out of the market for records
which is the major part of it's business. The factory has been on
a 3 day week since January, 1988 and staff who leave are not being
replaced. Agreement could not be reached on the issue at local
level and on 12th April, 1988, the matter was referred to the
conciliation service of the Labour Court. A conciliation
conference took place on 24th May, 1988. Agreement was not
achieved and on 31st May, 1988, the matter was referred to the
Labour Court for investigation and recommendation. A Court
hearing took place in Dublin on 23rd June, 1988.
UNION'S ARGUMENTS:
3. 1. The Programme for National Recovery provides for pay
increases to be calculated annually for three (3) years on the
basis of 3% on the first £120.00 of basic weekly pay and 2% on
any amount of basic weekly pay over £120.00. Where the
application of this formula would result in an increase of
less than £4.00 per week in basic pay for full-time employees,
the increases could be adjusted to that level by local
negotiation and local agreement. The Union is claiming the
wage provisions of the Programme only.
3. 2. The Union is claiming the wage provisions of the Programme
for National Recovery. These provisions must be implemented
and are not optional. Paragraph 3 of the Programme states
inter alia that the increases "shall" be applied through
existing industrial relatoins machinery, due regard being had
to the economic and commercial circumstances of the particular
firm or industry." The word "shall" clearly indicates that
there is no option with regard to the application of these
terms.
3. Paragraph 5 of the Programme states inter alia "except
where otherwise agreed at local level, these arrangements
shall apply from the expiry date of current Employer/Union
agreements." There has been no agreement at local level to
vary the implementation date of the Programme's provisions.
Consequently the wage increase must take effect from the
expiry date of the last wage round.
4. Many companies in respect of whose workers Joint Labour
Committees operate are commercially weak, yet those Committees
which have made proposals since the Programme was agreed, have
proposed the application of its terms.
5. The workers have co-operated with the Company in allowing
short time working (3 day week) and the depletion of their
numbers through natural wastage. Most of the remaining
workforce would only benefit, therefore, from three-fifths of
any increase granted and it is unacceptable to require them to
forego the increase provided for in the programme.
COMPANY'S ARGUMENTS:
4. 1. The previous wage agreement in the Company incorporated
a pay pause in recognition of the Company's deteriorating
financial position. The situation has continued to worsen and
the factory is currently operating a three day week. Staff
who leave are not being replaced in an effort to reduce costs.
(Company accounts made available to Court on confidential
basis).
2. Since the early 1980's the record/tape industry has
undergone a world wide recession. In Ireland the record
market has been particularly hard hit, due to a combination of
changing taste, depressed consumer demand and high VAT rates
on records and tapes sold at retail outlets. Record sales in
the Irish market have declined by 26% over the last year.
3. The technological revolution in the "sound" industry has
enhanced the production of compact discs etc. To meet this
competition the Company would need a major financial
investment. It has not got the resources to meet this
challenge. The decline in consumer spending in Ireland would
not justify the major risk which such a project would entail.
4. Historically, the record industry has always been divided into
a high season from October to December and a low season from
January to September. Traditionally the high season has
always been the profit making season while the low season has
been merely break even. In recent years the high season has
been shrinking and the low season has been so bad that it was
not possible to achieve break even and a deficit was carried
into the shrinking high season. The high season has declined
from profitability to break even whilst the low season is in
deficit. As activity falls below an acceptable level in the
low season, the unit cost of labour increases dramatically.
This low level of activity is being reached on a fairly
regular basis so it is therefore vital that the Company
controls labour costs.
5. In accepting export orders labour cost is always an
important consideration. As export orders have been a vital
tool used by the Company to remain in production, it is
important to give this point due consideration in considering
the broader implementation of rising unit labour costs and of
wage increases. As most of the Company's business is with the
Multi-National record companies who have their own competitive
production facilities in the U.K., the Company must always
consider price increases carefully. Everytime it's price
increases in relation to that of it's competitors it looses a
market share. Capital/Labour cost increases cannot,
therefore, be passed onto their customers in the form of price
increases, but must be absorbed by the Company. Given the
Company's weak financial position any absorption of wage costs
would threaten the continued operation of the Company (even on
its presently limited scale). Also any lost custom would be
very difficult to retrieve.
6. While the Company acknowledges the legitimate apirations
of its employees in terms of wage increases, the employees
must recognise the present difficult financial situation. The
employees of the Company are keenly aware through
non-replacement of staff and the 3 day week, of the serious
economic and trading position of the Company. The decline of
the record industry is well documented and the fall-off in
orders from major customers is an established fact. The
accounts show quite clearly the debilitating effect the record
recession is having on the Company's operations. Increased
unit labour costs weaken the Company's competitive pricing
policy in the market place and export orders can also be
eroded through increased costs. The Company has therefore no
alternative but to plead inability to pay.
RECOMMENDATION:
5. The Court has considered the submissions made by the parties
and additional financial information provided by the Company.
Whilst accepting the Company is presently suffering a serious
setback and is currently concerned about the future, the Court
notes the significant co-operation of the staff and has come to
the conclusion that given this continuing co-operation, the
implementation of the terms of the Programme would not be such a
burden as to be insuperable to the Company, even in its present
difficult position. The Court, therefore, recommends that the
terms of the Programme be implemented with effect from 1st
January, 1988.
Signed on behalf of the Labour Court
John O'Connell
-----------------------
7th July, 1988
P.F./U.S. Deputy Chairman