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Friday 19 September 2014

Strike averted but row erupts between unions and ESB over deal

But now Ogle raises questions over '€369m peace deal cost'

Published 09/12/2013 | 02:30

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The Christmas lights on Grafton Street, Dublin. Inset: Secretary of the ESB Group of Unions, Brendan Ogle

THE threat of Christmas blackouts has been lifted, but only after ESB management caved in to union demands to make its pension scheme more attractive for workers.

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The strike was called off after a breakthrough in talks between unions and management at the state electricity company last night.

However, hours after the deal, the Secretary of the ESB Group of Unions, Brendan Ogle, challenged an ESB statement that no further liabilities will be added to the company's balance sheet.

Ahead of the busy Christmas period, though,. the deal was widely welcomed by businesses, retailers, farmers and the Government.

ESB unions got an agreement that the pension will be classified as the more attractive defined benefit – not defined contribution.

Under the deal legal cases being taken by five workers over the pensions issue will be dropped and the ESB will cover the costs.

The company insisted that the deal would not cost the taxpayer any money, and that it would continue to pay a dividend to the State. But it does leave the ESB on the hook for digging out the pension fund in the future if the scheme remains in deficit.

Mr Ogle added unions believed that treating the scheme as a defined benefit scheme would involve adding a minimum of €369m to the balance sheet.

In a defined benefit scheme, the pension that a worker is entitled to at retirement is linked to earnings and length of service, so they know in advance what the pension will be.

In a defined contribution scheme, the pension that a worker receives on retirement is dependent on the value of the fund at that point, so the benefits are not fixed in advance.

Three years ago, the ESB changed the accounting treatment of its pension scheme from a defined benefit-type scheme to a defined contribution-type scheme.

After three days of talks at the Labour Relations Commission (LRC), an agreement was reached with two main components:

* The pension scheme will be recognised as being defined benefit.

* Whenever a deficit arises in the scheme both sides will talk to each other to agree arrangements to deal with such deficits.

The drawback from the union's side is, if a serious deficit arises in the future, it could potentially mean workers having to increase their contribution to the scheme to help plug the hole.

However, the company, which is profitable, would also be expected to share some of the pain and pump in money to shore up the scheme.

But the workers would still be guaranteed a better pension on their retirement. The ESB said the resolution of the issue "protects the financial strength of ESB".

VINDICATED

"There will be no additional liabilities on ESB's balance sheet. Therefore the company can continue to invest in critical electricity infrastructure in Ireland and continue to provide a return to its shareholders as planned.

"The agreement recognises ESB's existing obligations under the terms of the scheme and there will be no change to the accounting treatment of the scheme in the company's financial statements as a result," it said.

Union leaders claimed their stance was "vindicated" by the outcome.

SIPTU negotiator Greg Ennis, who was one of five union officials involved in the talks, said the discussions were "extremely intense and fraught".

"There was no compromise here. This was an all or nothing dispute and thankfully sense has prevailed," he told the Irish Independent. "We were deadly serious about striking, that's not a weapon I like to use but it was necessary to focus people's minds. Our position has been vindicated. The company's position was simply untenable."

Mr Ennis said there was an unprecedented level of media scrutiny of the individuals involved in the negotiations. And he hit out at some ministers whom he said were "unhelpful" with their comments about the dispute.

Mr Ennis added that a number of union officials, including Brendan Ogle, had received threats in recent weeks.

Before the LRC talks, ESB workers revealed plans at the weekend to mount an all-out strike next Monday, which would have resulted in a complete shutdown of all power generation.

The union's dispute committee made the threat just hours before workers met with management at secret talks, aimed at resolving a row over a €1.6bn hole in the company's pension fund.

Communications Minister Pat Rabbitte welcomed the resolution of the dispute: "The settlement is unqualified good news at this critical juncture of the year and of the country's economic recovery. Unions and management deserve credit for ending the uncertainty that threatened to do disproportionate damage to the country's best interests."

ISME chief executive Mark Fielding warned that the dispute had caused damage to the country's reputation and said it highlighted the need for special measures to protect essential services.

"I think what we have learnt here is that in 2013 the trade union movement hasn't moved on from where it was in 1913," he added.

Irish Farmers' Association president John Bryan said that a number of his members would have been forced to purchase diesel-operated generators in order to keep their businesses running.

The Chief executive of the Labour Relations Commission, Kieran Mulvey, has backed a call by ICTU's Dave Begg for "a summit" on pensions which are sparking an increasing number of industrial disputes.

Mr Mulvey said unions, management, the Pensions Board and the regulator should all get around a table to address the fact that most pension schemes in the country are in deficit.

"Workers need certainty as to their pension entitlements and whether they are getting good value for money. This is not an unreasonable request," he said.

Fionnan Sheahan, Niall O'Connor and Cormac Murphy

Irish Independent

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