The public will be greatly relieved that a threat of strike action by the ESB group of unions has been averted. A pre-Christmas blackout would have caused unnecessary hardship for many, and acute difficulties for some – in particular the aged, the sick and the vulnerable. A strike would have done huge reputational damage to Ireland's business image at a critical moment, coming a day after the State's exit from the bailout programme.
A dispute about future pension entitlements in the ESB requires a measured response by the disputants. The strike threat issued by the ESB unions was a quite disproportionate reaction to a grievance that has seemed more apparent than real. There was no imminent threat to pension payments and, given the nature of the dispute, legal action would have seemed the more appropriate course to take.
Nevertheless, the Labour Relations Commission, once again, has saved the day. It has successfully mediated between both sides, skilfully producing a mutually acceptable settlement. However, the agreement contains an element of constructive ambiguity, that has left its terms subject to somewhat different interpretations by ESB management and unions. Differences each side, wisely, have not sought to exacerbate. For Brendan Ogle, general secretary of the ESB group of unions, the agreement is confirmation that the pension scheme is defined benefit – including for accounting purposes. Funding deficits, he now expects, will be filled by the ESB.
ESB management, which has not helped its case by its refusal to offer any public defence of its position, other than by company statements, appears to have accepted the settlement terms – albeit with mental reservations. The dispute arose from the ESB’s decision in 2010 to change its treatment of the company pension scheme – from a defined benefit (or final salary scheme) to a defined contribution scheme, solely for accounting purposes. The ESB said it was following the current accounting standard, and so avoided placing a huge pension liability on its balance sheet. This would have adversely affected its credit rating and increased the company’s borrowing costs. It would also have meant a cut in dividend payments to the State.
The ESB insists the company pension scheme remains a defined benefit (DB) scheme, for all but accounting purposes, and has never been a “balance of cost” scheme – where the employer is liable to meet any funding deficit that arises. It remains registered as a DB scheme with the Pensions Board, with which the ESB has agreed a plan to meet the minimum funding standard by 2018. For now a strike has been averted, and, hopefully, avoided in future. A blackout threat has been lifted, for which the Labour Relations Commission can be thanked.