The Government has very little power to influence wage rates in semi-State companies, writes BARRY O'HALLORAN
THE GOVERNMENT might own State companies such as the ESB and CIÉ, but it has no direct control over how much – or how little – their workers are paid.
The Government wants to see the wages paid by these businesses cut, but any part it plays in doing this will be limited to the sidelines. State-owned companies have a commercial remit. In other words, they have to sell their goods and services in the market place and make a profit, just like any other business.
They hire their own staff, who are company employees, and thus have no direct relationship with the Government, the companies’ shareholder. Management negotiates pay rates with the unions, who represent virtually all semi-State workers. As a result, industrial relations bodies such as the Labour Court and the Labour Relations Commission (LRC) actually have more influence on semi-State pay than the Government.
And in some cases, these bodies are as willing to grant pay increases as pay cuts to State company workers. In October, the Labour Court ruled that Bord Gáis workers should get a 3.5 per cent increase, adding an extra €2 million a year to the company’s wage bill.
As the recession bit deeper earlier this year, Bord Gáis had ruled out paying the 3.5 per cent and the 2.5 per cent increases due under the national pay deal. The unions challenged and the two sides went to the Labour Court. It ruled that the company should pay, on the basis that it is profitable.
Government sources acknowledge that this is a problem. They point out that where there is a dispute, industrial relations bodies are likely to rule in favour of pay increases if the State company involved is profitable.
The Bord Gáis board has yet to decide if it will go ahead and approve the increase. If it doesn’t, there is a risk of a dispute with its 900 or so staff.
This illustrates the difficulty the Government faces. It can ask the individual boards of each State company to cut pay. The boards, all of which are well populated by political appointees, could agree. But if they attempt to go ahead and cut pay, they risk industrial unrest.
Brendan Ogle, an official with trade union Unite, which represents a large number of the ESB’s 7,800 workers, told The Irish Times yesterday that, if there was an attempt to cut pay, the company would have a dispute on its hands. “ESB unions would be very clinical about this,” he said. “There’ll be no marches or anything like that, we will just be in dispute.”
Willie Noone, Siptu branch organiser for the CIÉ’s public transport companies, warned his members would resist any attempts to cut their pay.
ESB workers are still seeking national wage agreement increases, although the company is proposing to freeze pay for two years. Its fellow energy company Bord na Móna has also pledged to freeze pay, as Bord Gáis originally wanted to.
Large pension deficits at many State companies further complicate the issue. The ESB’s scheme is €1.9 billion short of what it should be, while Bord Gáis is seeking to make up a €38 million shortfall.
Bord na Móna merged a number of its schemes earlier this year, following a ballot of workers. Any solution for the others will involve workers making some contribution or compromise, and they will be less likely to do this if their employers are attempting to cut their pay.
Despite all this, the Government does have some options, although these differ from one commercial State company to another.
An Post is in the process of implementing a redundancy programme that will see about 1,300 of its 10,000 employees leave the group over the next three years as it gears up for increased competition under EU rules.
The CIÉ group of companies – Bus Éireann, Iarnród Éireann and Bus Átha Cliath – froze pay, cut overtime and sought voluntary redundancies this year after the Government reduced its subvention to the companies. All these measures were geared at cutting wage costs.
The Government plans further cuts in subvention – paid to ensure CIÉ companies provide services on routes that are not commercially viable – from €303 million this year to €276 million in 2010, which is likely to prompt further cuts.
The State does not make any payments to companies such as the ESB or Bord Gáis, which are profitable. However, it does get dividends – a payment of a share of their profits – from them every year. A number of months ago, the Government sought a special interim dividend of €178 million from the ESB, after receiving €80 million from its 2008 profits.
Seeking increased dividends from profitable State companies is one option, where there are profits to call on.
It will boost the amount of cash coming into the exchequer, and could encourage the companies to keep a rein on wages.
The Government has signalled it will tailor its approach to suit each State company. Minister for Finance, Brian Lenihan, the majority shareholder in many of these enterprises, yesterday said there would be no question of attempting to make “one size fit all”.
Given the political and industrial relations questions he faces, the Minister had better have a whole wardrobe of sizes available to him.