LCR15510

SUBJECT:
1. Rates of pay.




BACKGROUND:

2. Galtee Meats was founded in 1967 and is part of the Dairygold Co-op Society. Since 1992 its production has increased from 5,000 pigs per week to over 9,000 pigs per week. Initially 95% of its production was consumed by the Irish market. In recent years the market share has changed. The home market now accounts for 58% of production and 42% is exported.

In 1992 agreement was reached following a conciliation conference held under the auspices of the Labour Relations Commission. Under the Agreement (details supplied to the Court) the rates of pay of existing workers were red-circled and new basic rates introduced for new employees.

The dispute before the Court concerns the Union's claim regarding the rate of pay for workers recruited after 1992. The Union claims that the considerable difference in the rates of pay of workers employed before 1992 and those employed after 1992 was never envisaged and is seeking that the issue be addressed in the context of the 1992 Agreement.

The matter was referred to the Labour Relations Commission. A conciliation conference was held on the 7th February, 1997. As agreement could not be reached the dispute was referred to the Labour Court on the 18th February, 1997 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 14th April, 1997.




UNION'S ARGUMENTS:

3. 1. The new basic rates were introduced on the basis that there was recognition that these rates would be increased after 2 years and when the Company returned to profitability.

2. The workers responsible approach to the Company's problems has contributed significantly to the Company's growth and development over the past 5 years and has played a major part in restoring it to economic viability.

3. The kill in the factory has increased from 283,172 in 1992 to 450,483 in 1994. If the average kill to-date is maintained this year, then Galtee could have a record year. The time is opportune to address the existence of the two tier wage structure which is causing tension and unrest.

4. The chief executive of Dairygold recently reported a profit in excess of £17 million last year and that all sectors had performed well.

5. The Union is seeking the introduction of the following scale:-

Year 1 £128.12
Year 2 £138.37
Year 3 £143.50
Year 4 £158.87
Year 5 £169.21

During Year 6 employees would be assessed in accordance with the criteria which exists for pre 1992 employees to determine whether they would qualify for the semi-skilled rate of £179.20 per week or the skilled rate of £186.91 per week.



COMPANY'S ARGUMENTS:

4. 1. In August, 1992 the rates of pay of existing workers were "red-circled". The unit cost of production on these rates was accepted as being uncompetitive. It was envisaged that the increase in employment of staff at the new official rates of remuneration would bring the average cost of production into line with other processors in the country. This has not happened to the Company's satisfaction. Losses were stemmed from 1992 onwards, but profits in 1994, 1995 and 1996 were less than 1% of sales. This position is unsustainable in the long term.

2. As part of the 1992 Agreement Galtee undertook capital investment and there has been an increase in employment of over 100 workers. This action was undertaken on the basis of the 1992 Agreement being honoured in full. Any attempt by the Union to re-negotiate the official rates of pay agreed at the time would undermine the rationale behind the Agreement which was to safeguard the viability and employment potential of the plant.

3. The home market of 58% is further threatened by the advent into this country of the UK multiples such as Tesco, who favour "own label" products.

4. If Galtee is to continue growing it can only do so in the export markets which are currently dominated by the Dutch and Danish processors, whose scale of operation is many times greater than Galtee's. The only way that Galtee can compete for this extra business is in maintaining unit costs. Pay increases such as this claim will increase Galtee's cost base without increasing production.


5. The competitive position is more difficult now than that which prevailed in 1992. In the circumstances the Court is requested to reject the Union's claim.





RECOMMENDATION:

The Court having considered all of the views expressed by the parties in their oral and written submissions finds that the parties in 1992 entered an agreement which reflected the serious situation in the Company at that time.

The Court does not find that the situation which led to this agreement has improved to an extent which would allow the arrangements made at that time to be rolled back.

The Court does clearly recognise that the continuation of a two tier system of payment with such large differences particularly in respect of staff carrying out duties of the same or similar nature is likely to lead to dissention.

Accordingly the Court recommends that the parties seek to agree arrangements which will result in improvements in efficiency and a reduction in unit costs, and arrangements for the distribution of the savings achieved which will assist in addressing the anomaly existing in the wage system.



Signed on behalf of the Labour Court



Tom McGrath
30th April, 1997______________________
F.B./D.T.Deputy Chairman



NOTE

Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.