Pension issue could lead to airport strikes on St. Patrick’s week


You may have read news stories last week warning that Ireland’s airports could be shut down soon by a strike and the national airline Aer Lingus could be grounded.  The unions have warned that this could happen around St. Patrick’s Day, a time that is not just a great symbolic national holiday but a week long festival that is hugely important for tourism.

It’s not that the unions are trying to damage the country, the economy or our international reputation, they say. Not at all.  It’s just a complete coincidence that the strike notice may take effect around then.

And if you believe that you probably believe in leprechauns as well.

Ireland, you will remember, is an island.  Forget about St. Patrick’s Day and the tourists for a moment, much as we would miss the American high school bands and cheerleaders who come here every year.  

Yes, a strike around St. Patrick’s Day would be embarrassing and extremely irritating.  But that’s only the start of it.  

Because we’re an island, air links are a vital part of life here and essential for the economy to function.  A series of one day strikes, which is probably what the unions have in mind until they get their way, would play havoc with everyone here, and not just those who might be visiting for St. Patrick’s Day.  

Because we’re an island, a threat to shut the airports amounts to national blackmail.  It’s outrageous that it is being threatened, whether it actually happens or not.  

And what makes it even more outrageous is the reason behind the threat – pensions.  

Readers of this column will be aware that the pensions issue in Ireland is one that we have been commenting on for some time.  That’s because it’s an area of great unfairness, possibly the most divisive issue in the country at present, with people in the state and semi-state sector on one side of the argument and the rest of us in the private economy on the other.  And the threat that is now hanging over the airports and Aer Lingus is a perfect example of what is going on.    

As we have been pointing out in this column for a year or two now, Ireland after the bust has become a divided nation.  

In the state sector – everyone who is paid by the state – where the unions are strong, the impact of the bust has not been felt nearly as much as in the private sector where companies have struggled to survive. The same applies to the semi-state sector, companies like the airports or Aer Lingus or Electric Ireland that were started by the state and are still largely state owned.  

There have been some downward adjustments in state pay, but in comparison with what has happened in the private sector they have been very limited.  This is particularly true in the semi-state sector where a virtual monopoly still exists in some areas.

In the private sector, thousands of people have lost their jobs and unemployment and emigration have soared, particularly among young adults.  In the private sector there is endless pressure to increase output and hold down pay as companies struggle to keep their heads above water.  No increases in pay are available to offset new taxes and charges and regular increases in family utility bills, health insurance and so on.

But pay is not the only issue.  The pension situation in the private sector is even worse than the pay issue.

Many private companies have ended their defined benefit schemes, the kind of pensions which give workers a set proportion – usually half – of their salary as an annual pension when they get to 65.

In some cases, private sector workers who have paid into pension schemes all their working lives have been left with a fraction of what they were expecting.   Around 80 percent of defined benefit pension schemes in private sector companies in Ireland are bust.

In the state sector, however, things are very different. Workers there, despite the fact that the state has to borrow billions to pay their pay and pensions, have seen little change in pensions.  The same applies in the semi-state sector.

Even for mid-level state workers like teachers and police guaranteed pensions of well over half their salary is the norm, allowing them a level of comfort following early retirement that private sector workers whose pensions have gone bust can only envy.

The situation is deeply inequitable.  But nothing is being done about it because most of those in a position to act – the politicians – are on the state payroll themselves and in line to benefit.  

Let me give you an example which is close enough to home to be painful.  Workers in Independent Newspapers, the biggest media group in Ireland formerly headed up by Tony O’Reilly, have been through a program which has radically changed the way they work and what they get paid.  The staff has shrunk to a fraction of what it was; everybody works longer and harder for much less.

The defined benefit pension fund, into which Independent staff have been putting around 10 percent of their pay over the years, has been closed down.  Because of the stock market collapse, like in other companies, the Independent pension fund now has a huge deficit.  Staff will now get around half the pension they were expecting, if they are lucky.