ESB’s pay increase could set precedent for other workers

The ESB has traditionally been one of the higher paid areas of the public sector. In the past it has been criticised for giving pay rises to staff at a time of austerity elsewhere.

However, with pay increases now becoming more common across the economy, the key question being asked about emerging pay offers is where they stand in relation to the average and whether they will lead to knock-on claims from other groups.

The proposed Luas pay settlement that emerged last month from talks at the Workplace Relations Commission of up to 18 per cent over three years immediately led to demands for rises of up to 25 per cent from workers in Iarnród Éireann.

The pay proposals for about 6,000 ESB staff involve an increase of 5.5 per cent over 2½ years as well as a lump sum of €2,750.

Average rises

The increase in pay is very much in line with average rises anticipated elsewhere this year. A recent survey of private sector companies projected annual increases this year of about 2.8 per cent.

The Lansdowne Road agreement for public service staff, which came into effect last January, also provided for pay restoration of about 2 per cent or so. However, it is the lump-sum payment of €2,750 which may raise eyebrows elsewhere in industrial relations circles.

This would effectively represent retrospective compensation for a pay freeze which was in place for a year for ESB staff between spring 2014 and spring 2015.

Lump-sum payments were a feature of ESB deals in the past. Their attraction from a company point of view is that they are non-recurring costs and are generally not pensionable.

But retrospective compensation for previous pay freezes have not been common across the economy in agreements concluded since the economic crash. The proposed lump sum of €2,750 would represent the equivalent of just over 4 per cent of the average ESB salary, which is currently estimated at about €65,000.

Front-loaded

The proposed ESB deal is also very much front-loaded with the pay rises being delivered within 16 months of its commencement.

One criticism of the proposed Luas settlement, was, for example, that the larger sums came towards the end of the period covered by the agreement.

The new ESB deal was negotiated in the wake of an outright rejection by unions of a previous agreement which was worth about 5 per cent over 2½ years.

Part of the reason given by unions, at least informally, for rejecting it was that it included lower pay rates for new entrants. It is understood the new agreement would see rises in the new entrant rates above what was originally proposed but they would still be lower than the traditional entry rates that applied in the company.