After years of failed negotiations, strikes and threatened strikes, Irish Ferries is giving democracy a chance, writes Eamonn Rothwell
"There is no more room for concessions or for brinkmanship . . . I do not believe the intervention of any other group or agency would assist at this stage . . . there is no role for the Employer Labour Conference . . . the officers will accept the overall plan or, if not, B&I will close from Friday".
The words of Bertie Ahern in the Dáil on December 9th, 1987, when he was minister for labour. How times haven't changed.
As a former journalist, I'm shocked by the majority of the coverage of the current Irish Ferries situation. It seems easier to feed off the daily (hourly?)press releases from Siptu and portray Irish Ferries as an uncaring, exploitative employer driven only by profit, than it is to research the merits of the arguments.
When Jack O'Connor, president of Siptu, says he does not believe Irish Ferries' statement last Wednesday, that 70 per cent of staff have accepted the severance package, he displays a complete lack of understanding of the care every plc takes before issuing any statement.
Irish Ferries is part of Irish Continental Group (ICG). The financially more attractive parts of the company are the ownership and chartering of ferries to international companies and the ownership and operation of container terminals and shipping routes.
Irish Ferries operates three ships between Ireland and the UK and one ship to France.
Return on capital in 2005 will be approximately 5 per cent, which is below the company's cost of capital of 8 per cent.
More troubling, this will fall to 1 per cent in 2007, absent major change in our cost base. Irish Ferries must stand on its own feet financially and cannot be subsidised by other parts of ICG.
Deterioration in financial performance is driven by the abolition of duty free (a hit of €10 million per annum to Irish Ferries), the emergence of low-cost airlines and the high cost of holidaying in Ireland (which has led to a decline of 9 per cent in the car market in 2005 alone) and the significant increase in fuel costs (up 50 per cent in 2005).
The ferry sector has responded by lowering its labour cost base, with 95 per cent of all ships using Irish ports now using outsourced crews, most of which are flying non-EU flags. Some use non-EU crews at even lower costs than EU staffing.
A Government agency, the Irish Maritime Development Office, issued a report in July 2005 stating that "outsourcing is a major threat" and that "Irish seafarers on certain trades are between 50-60 per cent more expensive on a positional basis than other seafarers".
The Irish Labour Court concludes, in its judgment of February 24th, 2005, in relation to outsourcing on the ship operating on our French route, that "the type of arrangements proposed by the company are now commonplace within the shipping industry internationally".
For many years Irish Ferries has been at pains to highlight the plight which the company is now facing, with both the Government and the unions. Numerous and unsuccessful attempts have been made to reach accommodation with the trade unions involving representations, submissions, statements and appeals to the Labour Court, the Labour Relations Commission and the National Implementation Board.
Instead of co-operation from the unions, we have experienced two Siptu strikes last year and two threatened strikes this year. This has had a damaging impact on our reputation, particularly with our freight customers, heavily committed to "just-in-time delivery".
The final intervention was the appointment of consultants nominated by Siptu to "conduct a thorough examination into all aspects of Irish Ferries' financial position" and to "develop a set of recommendations designed to meet the requirements of the business for consideration by both parties".
The consultants had full access to company records and came to the same conclusion as the company - that by the end of 2007 Irish Ferries would be unprofitable, stating that, "given the current business model, projections are not unreasonable". This information was shared with all staff.
The second part of their report was delivered a few weeks ago and was rejected by the company as falling woefully short of meeting the requirements of the business. The firm part of the recommendations would lead to an actual increase in our cost base.
The recommendations which were to be "negotiated" with the unions (back to the Labour Court again?) would potentially offset these increases but leave us no better off than we are now.
For example, the report recommended we revert to direct employment on the ship on our French route.
This, after investing €8.5 million in a voluntary redundancy programme, would increase our cost base by €4 million a year, returning the route to losing money and forcing the company to close the route.
In frustration after years of failed negotiations, broken promises, strikes and threatened strikes we decided to put our own recommendations to staff and give democracy a chance.
Staff have three options on the form they received. Vote for the amended working arrangements, accept the voluntary redundancy package or reject both offers.
The offer closes tomorrow. By lunchtime on Friday, 86 per cent had signed written acceptances of the offer of redundancy, including a clear majority of both Siptu and SUI members.
All of the seafaring staff have the option of staying directly employed with the company but on adjusted terms. New salaries are adjusted to the terms proposed by Siptu and the SUI for directly employed staff, tabled in the Labour Relations Commission in January 2005 for the retention of directly employed staff on the ship operating to France.
Senior officers will suffer no change in their remuneration package from current levels. In terms of the amount of time worked, the new proposals are that staff work 26 weeks a year, but are paid for 52.
At the moment, officers work 21 weeks a year and seafarers 23 weeks a year. Compensation will be paid for changes in these pay rates and loss of time off.
Rates of pay for agency staff are at or above the International Transport Federation (ITF) rate of pay for international seafarers, agreed annually between ITF (representing unions) and international shipping employers.
The lowest rate on their scale applicable for the Irish Sea is $17,300 a year. Given all accommodation, food, entertainment, travel and other living expenses are paid for, and the income is tax free to the recipient, the net take-home pay is substantially better than working in Ireland at the Irish minimum wage. Recruitment by the agency will be on merit and open to all EU people, including Irish citizens.
We are now facing the same dilemma outlined by Bertie Ahern 18 years ago. This time there can be no bail-out by the Government. Irish Ferries will soon be unprofitable, forcing the sale of the company or the redeployment of its ships. Neither of these moves will safeguard the 250 shore-based jobs. Both will lead to less competition and higher prices for exporters, importers and tourists. In media coverage on this issue, nobody is asking users, exporters, importers and tourists if they would like to pay higher prices to support the higher cost base which Irish Ferries now has.Our customers want and are entitled to lower prices. The company must make reasonable profits to fund replacement of its ships.
Almost 90 per cent of our staff have chosen the voluntary redundancy package. In light of these clear imperatives, it would be anti-democratic and anti-competitive were the Government to seek to interfere with the legal entitlements of our staff to their statutory two weeks' redundancy pay.
Eamonn Rothwell is chief executive of Irish Continental Group