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Aer Lingus unions have warned about a possible strike. Photo by: Sasko Lazarov/Photocall Ireland

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

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Aer Lingus unions have warned about a possible strike. Photo by: Sasko Lazarov/Photocall Ireland

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.

Bear in mind that Independent Newspapers was one of the country’s leading companies.  And this is not unusual. Pensions schemes in big private companies across Ireland have been decimated by the downturn.

Now contrast this with the situation for workers in Aer Lingus and the airports and the workers who were part of the giant aircraft maintenance facility at Dublin Airport.  All these workers are part of the IASS – the Irish Airlines Superannuation Scheme – which is a defined benefit scheme linking pensions to final pay, not to the stock markets.

The IASS scheme has a deficit of around €800 million (or around a billion dollars). Various suggestions, some backed by the Labour Court, have been made about how to deal with this, involving extra payments into the fund and reduced benefits for retirees.

But the workers are having none of it.  Because they see themselves as semi-state workers they want the state to step in and rescue them (the state is still the biggest shareholder in Aer Lingus).  And to get their way, they are threatening to bring air travel into and out of Ireland to a standstill.

You may remember that we were faced with a similar situation before Christmas when the workers at Electric Ireland (the former ESB which is still by far the biggest supplier of power here) threatened to turn off the country’s lights if their guaranteed pensions were adjusted.  They didn’t pull the plug, but only because they got what they regard as an assurance that their pensions are safe.  

What both of these situations have in common is power and virtual monopoly, and workers willing to use their position to blackmail the country into giving them what they want.

Workers in private companies here have been left to face retirement with severely reduced pensions. Workers in powerful state or semi-state sectors have been able to bully everyone else to protect themselves and their pensions.  

What is happening is a national disgrace.  It is a completely unjust situation, of course. 

But it is something that the trade unions, which now have their main power base in the state sector workforce, are fighting to retain.  So much for equality, brother.

In this column, some time ago, we suggested the basis for a way forward.  True equality across Irish society would mean that the pensions of all state workers would be linked to the average performance of all the pension funds that private sector workers depend on.

With all the statistics we have access to these days and all the computer power we have to analyze the figures, such a calculation would be possible.  Of course, any suggestion of this type is met with a furious response from our trade union “brothers.”

Fasten your seatbelts. There is severe turbulence ahead.

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