‘Without Anchors’ - Our Industrial Relations System in the face of Uncertainty
Courting controversy, Brendan McGinty delivered a forceful overview of the IR system at last week’s IRN conference, addressing the theme ‘Without Anchors’ - Our Industrial Relations System in the face of Uncertainty’. The former industrial relations heavy hitter at Ibec warned of the “absence of compass points to guide the actors in an increasingly fragmented (IR) system”.
Calling for more “coherence and coordination” at a time when there is an “absence of consensus on what type of IR system we should have or even a forum to debate”, Brendan McGinty touched on themes familiar to IR players on the employer and union sides of the fence, at last week’s IRN conference.
These include the demise of social partnership and the continued absence of an Employer Labour Conference or a National Implementation Body.
Employers “underestimate the challenges faced by unions in maintaining their influence.
Mr McGinty, currently managing partner of Stratis Consulting, played central roles in negotiating several social partnership deals, sat for many years as a ‘trouble shooter’ on the informal National Implementation Body and served on the board of the LRC (now WRC).
Mr McGinty also claimed that the current ‘Private Sector Protocol’ has been allowed to wither. And he chastised the new and much heralded Labour Employer Economic Forum (LEEF) as having “no impact on real ‘employment and workplace’ issues”. Few leading IR experts would disagree with that latter observation.
Mr McGinty also touched on situations – without naming any particular dispute – where employers “underestimate the challenges faced by unions in maintaining their influence in disputes in the face of competing sources of information, advice and direction available to members”.
He was surely referring, albeit indirectly, to the influence of the far left in some major disputes.
ESSENTIAL SERVICES
On essential services, Mr McGinty remarked that we have a Code of Practice on such disputes “that is ignored”, suggesting we should “fix it or legislate”.
Arguably, he is being a little unfair, in that in many semi-states there is agreement on a range of procedural steps prior to the triggering of industrial action, and in several cases – almost unnoticed – internal dispute resolution bodies have sprung up in the sector.
Lately, the Irish Aviation Authority has been followed by Aer Lingus and Bord na Mona in developing such structures. Both organisations were able to look to more long-standing examples like RTE and ESB. Meanwhile, IRN understands that in Coillte, an internal disputes mechanism is also under consideration.
However, in the various CIE transport firms little by way of innovation appears to have occurred, with almost predictable strike threats – some of them actualised like Dublin Bus last year – suggesting that IR in these long-standing organisations hasn’t undergone change of the type witnessed in the aforementioned semi-states.
CHALLENGES FOR WRC & COURT
Mr McGinty challenges the Labour Court and the WRC to meet the ‘world class’ ambition set for them.
In his view, they both need to build and show awareness of new forms of work, cope with developments in the ‘gig’ economy, and have “an appreciation of the implications of new developments in workplace innovation, change & operational excellence models”.
They should also “maintain intelligence on reward trend” he says, citing examples like ‘Pay & Reward, Market Based Pay, PRP, Variable Pay Systems, Flexible Benefits, and Pensions’.
Mr McGinty wants to see employment law statutes updated. A real bugbear of his is the fact that we have three codes of practice dealing with bullying & harassment.
He would also encourage discussion with the ADR community in recognition of the wide range of alternative conflict frameworks, and to shape how these should interact with the state system.
Regarding access to the state disputes system, Mr McGinty raises an important issue when he says we should consider the implications of widening access to some public service groups. Their relevance to the private sector must be fully maintained, he warns, noting that already 75% of IR case referrals to the Labour Court come from the public sector.
FDI BOARDROOMS WATCHING?
Mr McGinty believes there are serious consequences for institutional arrangements & IR practice arising from:
(1) any dilution of the Labour Court as the ‘Court of Last Resort’, when recommendations are rejected* and used as a stepping stone to further discussions rather than LCR’s bringing finality and
(2) the undermining of confidence in the effectiveness of the WRC adjudication service from process inconsistencies and should legal or constitutional challenges prevail.
*In international boardrooms the lack of finality within our IR system is increasingly a topic of concern and is damaging to our reputation.’
He believes there is a tendency in some IR disputes to push demands to the limit, regardless of the consequences, and has been shown to bring a better outcome with the threat of industrial action.
“This does not encourage parties to resolve issues at an early stage. We need to see finality in dispute resolution, a greater openness and acceptance of ADR and recourse to binding arbitration”, he said.
PAY FORECASTS
On private sector pay and pensions he made the following comments:
• We are not heading for a private sector pay surge, but amidst public sector union demands for pay restoration, tactically, the marker put down by the private sector unions is unsurprising.
• In 2016, most CB (Collective Bargaining) deals were around 2% with some variations between sectors. Given inflation trends and Government tax cuts of 0.5%, there has been real increases in disposable income of average workers.
• One person’s wage increase is another person’s price increase and for 2017 general run rates for CB outcomes will remain on trend (with sector variations) but employer's need to do more to manage expectations at enterprise level. With a hard Brexit and the uncertainty of the Trump US Presidency, a level of claim of 4% will fuel expectations that can’t be met.
• Little effort made to distinguish between ‘restorative’ and ‘normalised’ settlements on base pay. The former create higher ‘outlier’ settlements that when wrongly interpreted add pressure on pay settlements and so e.g. deals in both Luas and Dublin Bus, given the particular circumstances are no predictors of general pay movements.
PEACE DESPITE CRISIS
Mr McGinty acknowledges that cost saving measures coupled with key reforms and the LRA, “kept industrial peace in a time of crisis” across the public service.
He acknowledges the “real pain” taken with up to 14% cuts in pay, but notes the impact was “softened by annual increments” and the removal of the risk of compulsory redundancy.
But he also points out that despite fiscal pressures, public service numbers have increased since 2015 and are accelerating given recruitment campaigns for teachers, nurses and Gardai. Series issues remain with second level teachers (ASTI), “testing political, employer and union leadership … by ensuring bad behaviour is not rewarded”.
Mr McGinty said there is a sense of a “pre-election grab for resources” but on more positive side, he cites the LRA 'Oversight' Body’s “active and supportive” use of binding adjudication, which has been a key feature of public service agreements back to 2010.
PENSION ISSUES
Turing to the question of a successor agreement, he warns that full restoration “assumes that the original rates were appropriate, which they were not having been inflated by the criticised benchmarking processes”.
Mr McGinty highlights another old chestnut for employer bodies - pensions and security of tenure - which he notes that DPER Minister Donohoe has highlighted must feature in any talks.
He would like to see the introduction of a career average model for future service accrual for existing serving public servants (pre-2013), along with the option of a lower accrual rate. Accrued rights in respect of past service would be protected along with the final salary link for past service being preserved, he says.
The Stratis managing partner says it is “not tenable that pension increases for serving public servants have been linked to the salary growth of the jobholder”. He believes about €16bn could be saved by linking future pension increases to rises in the CPI (subject to an upper limit).
