LCR15540

FULL RECOMMENDATION CD/97/252 RECOMMENDATIONNO.LCR15540 (CC97/487) INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : MJM ELECTRONICS LIMITED MJM MANUFACTURING LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Owens Employer Member: Mr Brennan Worker Member: Mr Rorke

SUBJECT:
1. Claim by the Union for an increase in basic pay.


BACKGROUND:

2. The Company supplies components to the motor industry and employs over 100 workers. The Union, on behalf of 85 workers, is seeking a substantial increase in the basic rate of pay. The Company offered to increase the basic rate by approximately 16% in total on a phased basis from 31 March, 1997 with the final phase being due from 1st December, 1999. The Company offer included the increases due under Partnership 2000. The proposals were rejected following a ballot of the workforce. The dispute was referred to the Labour Relations Commission and a conciliation conference was held on 1st May, 1997. Agreement was not possible and the dispute was referred to the Labour Court by the Labour Relations Commission on the 19th May, 1997. A Court hearing was held on the 5th June 1997.


UNION'S ARGUMENTS:

3. 1. The present basic rate of the workers concerned is very low and needs to be increased substantially. The current weekly pay rates are significantly below the norms in the electronic industry and some £60 below the rates paid by companies in the region.

2. The Company has received many State grants enabling it to set up and grow. It has increased its workforce significantly.

3. The Company has a 5-year contract with Kostal Ireland Ltd. which employs over 1,500 workers. The pay rates at Kostal are significantly higher.




4. The Union is anxious to afford full co-operation to the Company in order to ensure its viability and competitiveness. However, pay rates must be increased to a realistic level. The Union is seeking a pay plan for the workers concerned similar to that applying in Kostal Ltd.


COMPANY'S ARGUMENTS:

4. 1. Because of a review of the contractual arrangements by the main customer the Company had to change from being a sub-contractor assembly operation to being a primary supplier. This had major cost implications for the Company (details to the Court).

2. The components industry is highly competitive. Year-on cost reductions are required by the customer. There is presently an over-capacity of 33% in the market.

3. The level of investment needed to meet customer requirements and the increase in labour costs has major implications for the Company's ability to be viable and grow.

4. The Company's offer amounts to an increase of nearly 16% over the period of Programme 2000. This amounts to an additional £350,000 on labour costs. The offer is extremely generous, particularly in the context of a new business operating in a vulnerable sector where the Company is unable to pass on additional costs to its customer.



RECOMMENDATION:

The Court considered the submissions (written and verbal) of the parties. Taking into consideration the fact that the Company is young and facing competitive difficulties at present, the Court makes the following recommendation:

That the offer of management be amended by increasing the first phase from 5% to 7.5%.

At the end of Partnership 2000 the parties meet and review the pay structure in the Company independently of the restrictions which a possible new National Agreement could impose.



Signed on behalf of the Labour Court



Evelyn Owens
9th June, 1997______________________
T.O'D./S.G.Chairman



NOTE

Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.