Four-year agreement in state electricity company

A four-year deal in Ireland’s state-owned electricity company, ESB, covering pay, pensions and change has been backed by a two-to-one majority of the company’s 9,000 employees across five main trade unions.

Workers in the state-owned Electricity Supply Board, ESB, have agreed a major four-year agreement covering pay, pension contributions and consensus on how future change will be dealt with at local level within the nationwide company.

The agreement is the third in a series of what the parties themselves have labelled as ‘partnership type’ agreements. The first two such agreements were the 1996–1999 Cost and Competitiveness Review (CCR) (IE0004210N), followed by the Programme for Competitiveness and Transformation (PACT) (IE0209202N), which formally expired in July 2005.

The new agreement was achieved after two years of ongoing talks and the involvement of the state’s dispute resolution institutions, including the Labour Court and the social partners’ National Implementation Body (NIB). The latter oversees national partnership agreements and often intervenes in disputes of major national significance. However, the final key intervention was made by the company’s independent Joint Industrial Council (JIC), with the trade unions and ESB management building on its findings to negotiate a final settlement.

The initial recommendation from the JIC suggested that both management and employees would have to make higher contributions to the company pension fund, which was suffering a €511 million deficit and required urgent attention. The final agreement represents an amended version of the JIC’s finding.

The basic terms of the new agreement include: a 2% pensionable pay rise; a ‘buy-in’ lump sum of €3,000 for every worker; increases in pension contributions from the company (4.5%) and the employees (2%); a once-off €25 million ESB payment to the pension fund; an agreement on the principles of local bargaining; and an industrial peace clause.

The 2% increase in the employee contribution to the pension fund is effectively neutralised by the 2% rise in pay. However, this pay rise and the lump sum payments will be in addition to national wage rises that will be agreed over the next few months between the social partners.

The agreement allows for new local-level negotiations within ESB on change, which could mean that certain employee categories will negotiate further pay rises in return for verifiable change in a variety of areas, such as the power generation stations and the electricity network.

When the trade unions in ESB initially lodged claims in anticipation of a new agreement as far back as December 2003 (to replace CCR), they sought an 18% across-the-board pay rise and an extra 15% in shares – on top of the almost 5% already owned by employees within the Employee Share Ownership Plan (ESOP). However, the huge pension fund deficit eclipsed other claims as the main priority item on the agenda of management, the trade unions and government. It was essential to begin resolving this problem for current and future ESB pensioners as the company scheme is highly valued.

On the shares demand, the Irish Government insisted that there could be nothing on offer unless the company, or some part of it, was sold off. The unions agreed to drop the demand early on in the two-year period that it took for this deal to be agreed. However, disagreements on strategy and tactics – as well as personality clashes – led to three of the trade unions leaving the formal Irish Congress of Trade Unions’ ESB Group of Unions last year. Efforts to rebuild trade union unity within ESB are expected in 2006 after a number of attempts to do so failed last year.

Brian Sheehan, IRN Publishing