independent

Wednesday 16 April 2014

Unions claim victory but row proves relations with management are frosty

THE most important point to emerge from the settlement of the ESB strike is that it will not cost the taxpayer a penny.

The icing on the cake is that we will have light and heat over Christmas and for the Government that the country's reputation abroad remains intact. It will be the parties to this bitter and complex dispute – the company and the workers – who will share responsibility for any future deficit in the company's pension scheme, precisely what they have been doing for the past 70 years or so.

Brendan Ogle (below), secretary of the group of unions, stressed this over the last week when he said that he would be "appalled" if the taxpayer had to stump up to guarantee ESB workers' pensions. He argued it was the highly profitable ESB that should guarantee their pensions.

In 2008, the scheme had a €1.9bn deficit. The company and the unions got together in 2010 and agreed to address the deficit with the company contributing €591m over 10 years while workers also contributed through a pay freeze, extra contributions and a cut in benefits.

However, mindful of its reputation to investors, the company decided to refer to the scheme as a defined contribution scheme in its annual accounts, which theoretically shifted the risk over to the workers and at the same time improved the company's balance sheet.

However, the company always regarded the scheme as a defined benefit scheme and told the unions that there was no risk to workers' pensions as the company would be around for a good time yet.

As pension schemes go, the ESB scheme is fairly healthy. However, the unions demanded more reassurance for workers. The company didn't help matters when it said that while the scheme was healthy, it had no liability "whatsoever" for any future deficits. The fact that a dispute over a possible deficit in a relatively healthy pension scheme could have shut down the country indicates how relations between the unions and ESB management has deteriorated over the years.

There were also growing tensions within the group of unions, particularly between the British-based Unite union and the electrical union, the Teeu.

On the other side of the table, there were also differences within the company with some believing that the unions had to be confronted while others believed a strike would be a political and reputational disaster for the company.

The trade union establishment was increasingly concerned that what was becoming a very political dispute would damage their efforts to secure collective bargaining rights as promised in the Programme for Government.

The sound of a Labour minister – Ruairi Quinn – calling for serious consideration to be given to banning strikes in essential services sent shivers down the unions' spine. So it was up to Kevin Foley and Anna Perry of the Labour Relations Commission – once again – to call both parties in and suggest the solution that was staring everybody in the face.

It is that instead of one side shouldering all the risk, in the unlikely event of a deficit in the scheme in the future both sides will engage with each other in "line with agreements and normal practice to address the issue".

In other words, unions and the company will address the deficit together, as they have done in the past. The unions are claiming the recommendation that the company refer to the scheme in their accounts as a defined benefit scheme is a victory, while the company points out that there will be no liabilities on ESB's balance sheet.

Irish Independent

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