Farm Ireland

Monday 16 July 2018

Double digit hikes in pay costs at dairy processors

Glanbia's €185m processing facility at Belview
Glanbia's €185m processing facility at Belview

Louise Denvir

Staff costs at Glanbia increased by 22pc on average last year, with average employee's costs of almost €74,000 per head.

Total pay costs in the company increased by €84m, with a third of this accounted for by the 9pc increase in staff numbers to a total of 4,630.

The increase includes exceptional costs of nearly €12m, up by €10m on the previous year.

Employee costs at the company are now among the highest in the industry.

A statement from Glanbia said that payroll costs increased by 18pc in 2015, and attributed some of this to the 21pc strengthening of the dollar in the same period.

Comparable figures for Kerry, which has over 23,223 employees, stood at just over €48,000 per head in 2015, even after a 10pc increase in staff costs at the multinational. Another dairy processor to experience a significant hike in staff costs is Aurivo, with a 25pc increase in 2014, the most recent year for which figures available.

The western co-op's 2014 report shows that staff costs for nearly 700 employees amounted to €51,569/hd, which was €10,000/hd up on 2013.

The most recent figures for Dairygold also relate to 2014 when there was a 6pc increase in staff costs, with at least a third of this attributable to a 2.5pc increase in staff numbers.

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Its cost per employee stood at €52,000.

Carbery's staff costs for 2014 averaged €61,537 for its 540 staff, almost unchanged from its 2013 figures.

Despite the massive €4.4m pot shared by Ornua's nine top executives in 2015, average employee costs at the company actually fell to €47,000 in 2015.

This fall comes a year after a massive 31pc jump in staff costs at the former Irish Dairy Board in 2014, leaving the company with a 26pc increase over the last two years.

However, the majority of this increase is accounted for by the 19pc increase in staff taken on by Ornua since the start of 2014.

Lakeland Dairies accounts for 2014 show that its average staff costs were close to €55,000 per employee. Employee numbers increased by 5pc, but total costs rose by double this, at 11pc.

Arrabawn's 2014 report shows that its employee costs are among the lowest in the sector, at an average of €45,000.

This represented a 2.6pc increase per head over the previous year. Staff costs outlined in annual reports typically include basic salaries, along with social security and pension costs.

Car allowances, health insurance and share benefits are also included in the figures used here.

In addition, exceptional items such as redundancies associated with the purchase and closure of different businesses are included.

The average rate of increase in salaries in the EU and the UK in 2015 was 1.6-3pc, according to the most recent Kerry Group report.

Long-term incentive plans, which grant shares to employees are also a common incentive used by large companies to retain their most prized staff.

Even companies such as Ornua that has no stock-market listing have adopted the concept.

In the last three years, €2.5m of 'share options' have been granted to a "limited number of executives and senior management".

The cash amount is paid out over three years, but only starting three years after the inital grant.

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