- Observatory: EMCC
- Published on: 02 March 2008
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
This report explores the employment impact of globalisation and reviews the attitudes and responses of national governments and the European social partners to this phenomenon in Ireland.
Institutional responses to globalisation
Government action to prevent or reduce the extent of off shoring/relocation
Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?
If so, please give summary details and indicate the activities concerned
Yes. See below.
Social partner attitudes towards off-shoring/relocation
Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?
If so, please indicate the cases concerned, how the possibility has been used and whether its use has become a more frequent occurrence.
Yes. Government action to ameliorate the impact of off-shoring, and provide greater protection to workers in instances of collective redundancies, was inextricably linked to one particular high-profile dispute, at Irish Ferries. The Irish Ferries dispute ensured that factors associated with the relocation of production became a major factor in collective bargaining. The relative lack of regulation of collective redundancies in the Irish labour market was a factor in a bitter dispute in 2005 over job displacement at Irish Ferries, when 543 directly employed unionised workers were offered ‘voluntary’ redundancy and then replaced by lower cost temporary agency labour from eastern Europe. The move was opposed by trade unions, but the problem for the public authorities was that it fell outside the jurisdiction of existing Irish and international maritime labour law pertaining to collective redundancies – particularly as the company announced that it was re-flagging its vessels in Cyprus. After many months, a deal between Irish Ferries and union representatives was eventually concluded at the end of 2005, after frequent interventions by various dispute resolution institutions, but only after 543 direct jobs had been displaced/replaced.
Although the outsourcing of seafaring jobs at Irish Ferries was not prevented in that particular instance, in the aftermath of that dispute the Irish Government, after lobbying from the trade union movement, introduced proposals in 2007 under the national agreement, Towards 2016, to address exceptional collective redundancy situations. The measures are intended to provide greater protections to workers against forces associated with globalization/European integration/off-shoring/re-location. However, there are differences of opinion among employers and unions as to the nature and extent of the phenomenon of relocation/off-shoring.
A key paragraph in Towards 2016 states, ‘The opening up of the Irish labour market arising from the decision to permit direct access by citizens of the new EU Member States has given rise to concerns about the possibility of the collective compulsory replacement of workers by lower paid workers from these States or elsewhere, either directly or through the use of other replacement workers within the jurisdiction. The parties to this agreement are agreed that this has the potential in certain circumstances to be harmful to the maintenance of good industrial relations in this country’.
In essence, the new Collective Redundancies Act 2007 provides ‘for the establishment of a redundancy panel and the reference to it of certain proposed collective redundancies and for related action by the Minister for Enterprise, Trade and Employment, including the obtaining from the Labour Court of opinions on the nature of proposed collective redundancies; to remove the upper age limit for entitlement to redundancy payments; to make consequential amendments of the Protection of Employment Act 1977, the Redundancy Payments Act 1967, the Redundancy Payments Act 1971, the Redundancy Payments Act 1979, the Unfair Dismissals Act 1977 and the Employment Equality Act 1998; and to make further amendments of those Acts to update penalties and for purposes of statute-law revision’.
A central element of the new legislation is that a special Redundancy Panel is to be established, on a statutory basis, to advise the Minister for Enterprise and Employment on whether a collective redundancy case should be referred to the Labour Court for a ‘binding opinion’. The intention is to address exceptional collective redundancy situations and prevent a so-called ‘Irish Ferries on land’ scenario, by bringing in an element of labour market ‘protectionism’ to prevent the possibility of the collective compulsory replacement of existing workers by lower paid workers.
Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?
If so, please indicate the cases concerned and outline their main features
Given the openness of the Irish economy, and the fact that there are few laws/barriers preventing companies from relocating production when they are determined to go down this road, there are no cases where unions have successfully resisted production relocation per se. However, there have been cases where unions have offered/been forced into concession bargaining/flexibilities in order to head off relocation. In a number of instances, firms have used the threat of production relocation to secure concessions.
The case of Irish Biscuits - owned by Jacob’s Fruitfield - is a good example of concession bargaining, whereby production relocation was circumvented. The survival plan approved by workers at Irish Biscuits in 2006 – under threat of closure – focused on increased flexibilities and lower cost new entrants, while keeping pay and benefits for existing workers intact. Management wrote to the workers in February 2006, effectively saying that they had a choice between accepting the plan or closing the plant. In other words, it was a no choice scenario. In a preamble to the survival plan that was approved by the workers, the company set the business background to the need for change. It pointed to the way that discount retailers, such as Aldi and Lidl, have quality biscuits at prices up to 80% lower than Irish Biscuits. The company said it was faced with a choice of sourcing product from low cost manufacturers in the UK and Europe or achieving a matching cost structure at the Dublin plant.
In the pre-survival plan situation, wage costs accounted for 44.9% of total manufacturing cost. The company said that many firms would be seeking a wage freeze or even a cut in such circumstances. However, it was clear that a major contributor to costs was the absence of any significant degree of flexibility and mobility within the factory and the restrictions of demarcation. Therefore, a key element in the plan was a significant increase in flexibility and mobility, with a training programme so that each employee will become skilled in four to five different jobs. This will reduce the level of what the company calls ‘idle labour’, which is defined as any worker who is not performing their primary function due to scheduling or machine breakdown/stoppage. Demarcation barriers were also lowered. For example, operators will assist craft workers as required and operators will also address routine non-technical faults on equipment, in line with industry best practice. In terms of pay and benefits, most of the existing workforce were not significantly affected. They have been on an annualised hours system for some years, which continues. However, all new employees will be on new contracts, with different (less beneficial) pay and conditions. Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?
If so, please briefly describe the cases concerned
Yes. In some instances, trade unions have had little choice but to pragmatically accept the relocation of production as a means of preserving some jobs. This was the case with cosmetics firm Procter & Gamble, which negotiated a redundancy deal with the Services Industrial Professional and Technical Union (SIPTU) covering 280 staff, but with a further 220 jobs being preserved. In March 2007, Procter & Gamble said in a statement that it is to transfer manufacturing of its skin-care products division from Nenagh to Lodz in Poland over a two-year period with the loss of 280 jobs. Concern had been growing for the future of the entire Nenagh operation which employs 500 people in total. But the company said that it will retain its cosmetics manufacturing division in the North Tipperary town, making the jobs of 220 workers secure. The decision by the company to transfer production of its skin- care products to Lodz follows a year-long sourcing study by the company to identify what it described as ‘the optimum manufacturing locations for the European supply of skin-care and cosmetics’. According to the statement, the decision to move its skin-care manufacturing division to Poland was a result of the growing demand for the company's products such as Oil of Olay in eastern Europe. The pragmatic task facing the union was to secure a decent redundancy settlement for the 280 staff to be let go (six weeks pay for each year of service plus two weeks statutory entitlement) and preserve the jobs of the remaining workforce.
Government policy on foreign-owned firms controlling significant sections of the economy
Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?
If so, please give summary details and indicate which sectors this applies to as well as whether any distinction is made between companies according to their nationality (e.g. whether non-European companies are treated differently from European ones)
The past 30 years have witnessed an ever-increasing volume of takeover and merger activity within Ireland of both private and public companies by national and international companies. There have been a number of mergers and takeovers involving companies in Ireland. These include the UK-based company Boots acquiring HCR, the UK-based retail company Tesco acquiring Quinnsworth, the acquisition by British Telecom (BT) of Esat Telecom, and the takeover of TEAM Aer Lingus by Danish conglomerate FLS. The Irish Government does not have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms. However, there are regulations in Ireland relating to mergers, acquisitions and takeovers. Over the past few years, a number of changes have occurred in the Irish market for mergers and takeovers. In July 1997 the Irish Takeover Panel, established by statute, commenced the regulation and monitoring of takeovers. The rules introduced provide a statutory framework for the conduct of Irish listed companies. Also, merger and takeover control in Ireland is governed by the Mergers and Takeovers (Control) Acts, 1978 to 1996. Where a takeover proposal is deemed to come within the scope of these Acts, each of the enterprises involved is required to notify the Minister for Enterprise, Trade and Employment in writing of the proposal within one month (or other such period as the Minister may specify) of the offer capable of acceptance having been made. Full details of the proposal must be provided, including details of any changes planned in the operation of any of the enterprises as a result of the proposal, for example changes in the level of employment. A merger or takeover cannot be concluded until the Minister has stated that he/she does not propose to prohibit it either absolutely or subject to conditions, or in the absence of such a statement, until a period of three months has elapsed from the date of notification or from the date of receipt of such further information as the Minister may require. The Minister has the discretion to approve a proposal, without referral to the Competition Authority (a statutory body with investigative powers). If the Minister feels that the exigencies of the common good so warrant they may refer the proposal to the Competition Authority for investigation. If such as referral has not been made within a 30 day period, the proposed merger or takeover cannot be prevented. The Minister having considered the recommendation of the Authority may permit the proposal without conditions, or prohibit it absolutely or subject to conditions.
Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?
Please indicate the sectors concerned and the stated reasons for the restrictions. Please also indicate whether the restriction apply to companies from other parts of the EU as well as from outside
Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?
If so, please indicate the sectors concerned and the nationality of the foreign companies involved as well as the reasons given for the decision
Not in relation to acquisition of a domestic company by a foreign company. However, the attempted domestic takeover of former state Irish airline, Aer Lingus, by private Irish airline, Ryanair, was blocked.
Social partner responses to the take-over of domestic firms by foreign-owned ones
Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?
If so, please give summary details, indicating whether there is any evidence of different attitudes being shown towards European firms as opposed to companies from outside Europe
No, not explicitly because of nationality.
Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?
If so, please give summary details, indicating the nationality of the company concerned and whether there is any evidence of European and non-European companies being regarded differently in this regard.
Attitudes to globalisation
Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
If so, please give summary details, indicating whether or not the position varies across sectors of the economy
Yes. The Irish Business and Employers Confederation (IBEC) has consistently argued for greater freedom for employers to manage company re-structuring unilaterally in response to the competitive pressures presented by globalisation, free from the constraints of employee representatives and employment regulation generally. Employer associations in Ireland portray outsourcing and production re-location in certain sectors as an inevitable, and indeed necessary, consequence of globalisation, and have called for measures to boost competitiveness, including upskilling, greater flexibility and willingness to change.
Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
Yes. But the trade union position is a mixture of defensive and proactive. By and large, trade unions in Ireland have traditionally tended to adopt a defensive posture when confronted with the impact of globalisation, for instance in terms of trying to get the best redundancy deal for members who have lost jobs as a result of the relocation of production. The problem for trade unions in Ireland is that their members in traditional manufacturing are facing the full force of globalisation, given that a shakeout is taking place is this sector. Trade unions are opposed to outsourcing, but where they cannot prevent it, they would attempt to negotiate the best agreement possible. In short, they try to stem the negative impact. Irish trade unions are strongly in favour of enhanced employee protection rights in the face of corporate re-structuring/production relocation. As noted above, the trade union movement secured new wide-ranging employment rights for workers – including greater protection in the event of collective redundancies, as well as a significant strengthening of the labour inspectorate.
In some instances, Irish unions have also indicated that they want to engage more proactively with globalisation – for example, by engaging, through Ireland’s social partnership process, with various initiatives aimed at upskilling workers. Indeed, as far back as late 1994, the Executive Council of the Irish Congress of Trade Unions established a Review Group to consider issues arising from company restructuring and its implication from trade unions. The report of the ICTU Review Group stated that all unions should be prepared for ongoing change, develop an expertise in the management of change and an understanding of the economic and other factors driving change. Some of the main concerns in relation to workplace change which were outlined in this report include the fact that ICTU feel that the vast majority of Irish companies regard the planning and development of business strategy as the exclusive prerogative of management. Workers generally expect that the process of change will inevitably take place at their expense through job losses, income reduction and loss of status or promotional opportunities. The 1994 report stated that the ICTU Review Group believes that trade unions, in order to fully protect the interests of their members, must demand a right to be involved in all issues affecting the welfare of the enterprise. In the negotiation of restructuring and change, the ICTU feels that measures must be introduced to provide workers with opportunities, through training and positive action programmes, to change jobs and careers and avail of employment opportunities in the company.
If so, please give summary details, indicating whether or not the position varies across sectors of the economy
*A Eurobarometer survey on globalisation was carried out in 2003 in the EU-15 Member States. This might serve as a useful point of reference for the countries concerned, to see, for example, whether or not national attitudes expressed in the survey are in line with similar surveys which have been conducted nationally. The survey findings are available at:
Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?
If so, please summarise the main findings of these. Please give a breakdown, where possible, in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region).
The most reliable data on Irish attitudes towards globalisation is contained in the Eurobarometer survey, the latest data coming in 2006, as contained in Eurobarometer 66.1, conducted in autumn 2006. It indicates that Irish people have the most positive attitudes towards globalisation in the EU. The main findings pertaining to Ireland are:
Attitudes towards EU Membership and Policies:
Seventy-eight percent of Irish people believe that Ireland’s membership of the European Union is ‘a good thing’; eighty-seven percent of Irish people believe that Ireland has benefited from EU membership; seventy-three percent of Irish people have a positive image of the European Union; Irish people tend to regard EU membership as having a ‘good effect’ on the economy: ‘our economy’ (89 percent), ‘our standard of living’ (88 percent) and ‘employment in our country’ (81 percent); people also tend to be very positive about the effects on membership on ‘our influence in theworld’ (75 percent) and ‘our country’s security’ (70 percent); when it comes to political union, Irish people are amongst the least enthusiastic (55 percent).
The European Constitution:
Fifty-eight percent of Irish people are ‘for’ a constitution; fifty-six percent of Irish people support the European Constitution; in order to progress ratification of the European Constitution, the most popular strategy amongst Irish people is to renegotiate the European Constitution (35 percent); 24 percent believe that the EU Member States should continue with the ratification process and nine percent believe that it should be dropped.
There is little appetite or enthusiasm for enlargement: three percent of respondents believe the EU should prioritise ‘welcoming new Member Countries’ and three percent believe it should prioritise ‘preparing a new enlargement of the EU’; Irish people have a more favourable attitude toward Bulgarian (41 percent) than Romanian (38 percent) membership.
Attitudes toward the Economy, the Single Market and Globalisation:
The vast majority of Irish people are ‘satisfied’ with life in Ireland (90 percent); Irish people tend to be slightly more optimistic about their own situation than the national economy: 47 percent of Irish people think their ‘life in general’ will improve over the next twelve months and 36 percent think the financial situation of their household will improve; 33 percent believe the employment situation in Ireland will improve and 31 percent think the economic situation will improve; Irish people exhibit a positive attitude toward the single market as 73 percent of people feel it has had a positive effect; sixty-four percent of Irish people think Irish companies are more competitive internationally than they were 10 years ago; seventy-four percent of Irish people report that they have benefited from ‘a wider variety of goods from other EU countries’ and 69 percent from ‘the common currency, the Euro’ (26 percent report that that they have not benefited from the common currency); most Irish people agree that ‘free competition is the best guarantee for economic prosperity’ (70 percent); most Irish people regard globalisation as having a positive effect on ‘scientific and technical progress’ (57 percent), ‘economic growth in our country’ (56 percent) and ‘employment in our country’ (52 percent); Irish people tend to be less sure about the positive effects of globalisation on issues such as the ‘environment’ (44 percent), ‘health’ (39 percent) and ‘disparities between countries’ (38 percent).
Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?
If so, please summarise the main findings of these as regards:
off-shoring(or the relocation of production abroad;
the take-over of domestic companies by foreign-owned ones and/or the growing extent of control by foreign companies of parts of the domestic economy
the establishment of new plants and offices by foreign-owned companies
Where possible, please give a breakdown in each case in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region)
Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by a non-EU companies?
If so, please give summary details of the differences in response to EU integration as opposed to globalisation.
Tony Dobbins (IRN Publishing)