Redundancy payments in the motor industry are rarely above the statutory minimum so many are happy to opt for short-time, writes SHANE O'DONOGHUE
AN ESTIMATED 6,500 workers have lost their jobs in the motor industry since the end of last year and for many the best they can hope for is the minimum statutory redundancy payment of two weeks’ salary for every year of service.
Whereas in other industries, negotiations between employee groups and the employers have resulted in better terms, a large proportion of the job losses in the motor sector involve workers who are not represented.
Siptu officials recall just one recent case where its motor industry members received a higher redundancy than the statutory payment: J Donohoe’s BMW dealership in Co Wexford, where six members of staff received four weeks’ pay for each year of service – though that figure was inclusive of the statutory entitlement.
While mechanics earn a basic salary of between €30,000 and €45,000 – depending on experience – sales staff typically command just €16,000 to €20,000, so they rely heavily on commission from sales. According to Chris Mooney, chief executive of the Union for Motor Trade Employees (UMTE), “a lot of them did well in the boom years: we’re talking €60,000 to €80,000 for a good salesperson”.
For these workers, the problem is that redundancy payments are usually calculated based only on the basic salary.
Mooney says redundancy payments across the sector have been pretty abysmal. “There have been no big-money handouts to any degree in the trade. I think it’s the case that, if companies are letting people go, they are in dire straits and have no choice. Some companies gave an extra couple of weeks but they were few and far between. There certainly hasn’t been the five or six times the statutory you hear people say. The money just isn’t there.”
However, Mooney points out that he is encouraged by the general feeling from the dealers that they’re trying to maintain employment, even if this means fewer hours. “I am surprised by the amount of employment there still is. Many of the employers kept on people and hopefully it will pick up.”
According to figures from the Society of the Irish Motor Industry (SIMI), out of a total Irish industry workforce of 50,000 before the recession hit, more than 5,000 workers have reduced their working weeks to date. That’s one reason large-scale redundancies have not been as dramatic as some expected. However, it perhaps disguises a deep-rooted problem.
Mooney suggests that many workers are hanging on, even salespeople working on a low basic wage usually dependant on sales to make commission.
Chris Morrissey of Samson Recruitment specialises in motor industry jobs and he confirms that there are really no sales positions available, despite used cars selling reasonably well. However, on a brighter note he does say the employment market for aftersales workers is still buoyant, with plenty of demand for good panel beaters, spray painters and the like.
“At the moment there are candidates seeking work in all aspects of the motor trade, but mainly the sales people would have been affected,” says Morrissey. “A lot of the body shops are now saying that their work is picking up.”
However, this aftersales business is unlikely to be able to support the large-scale dealerships that popped up over the past decade. Paraic Mooney, managing director of the EP Mooney Group, told Motors that he has had to reduce his workforce from 280 to 115. Like so many car firms, these staff received just the statutory entitlement.
Even with such cost-cutting, Paraic Mooney admits that his business, as with many others like him, is in dire straits. He says the Government needs to make the hard decisions now and get on with it. “It’s almost impossible to plan for next year; there are no positive indicators at the moment. The country is rudderless. The banks are not, despite what they say, lending credit out to people to buy cars, and also they’re making it very difficult for dealers to run a business because there are a lot of restrictions on working capital that weren’t there a year ago.”
The banks have regularly refuted such claims, assigning the reduction in acceptances on car finance lately to “poor quality customers” rather than a change in policy.
Paraic Mooney strongly believes a scrappage scheme is needed, if nothing else, to clear stock piled new cars and create employment. “Somebody has to put the number plates on the car, somebody has to prepare the car; somebody has to deliver it, somebody has to invoice it. It’d be thin margin stuff.
“But then the banks aren’t going to finance it. They need to get things moving on that side.”
Unless consumer confidence returns and lines of credit open up once more, there will be significantly more job losses in this sector and workers will walk away with nothing more than an inadequate redundancy payment to look to the future with.