6.4. Irish Ferries, exploitation and displacement: trade unions say ‘Stop!’
If the GAMA dispute marked a turning point in trade union consciousness, it was the Irish Ferries dispute that pointed the unions to the need for stronger legislation and greater enforcement to protect jobs and secure equal pay and conditions for both indigenous and migrant workers. It was the dispute that turned the term ‘displacement’ into more than union rhetoric. But, perhaps as significantly, it was also the Irish Ferries dispute that impacted on public consciousness and introduced concepts such as migrant worker exploitation, depression of wages, social dumping and race to the bottom into general discourse.
While the Irish Ferries debacle only reached the public consciousness towards the end of 2005, it had its roots in a dispute that began a year earlier. In late 2004 Irish Ferries, part of the Irish Continental Group (ICG) had reflagged one of its ships, the MV Normandy in the Bahamas and attempted to replace the Irish crew with agency workers from the Baltic States at significantly lower rates of pay. This led to a dispute with SIPTU, one of the unions representing the existing workforce. The dispute escalated when Irish Ferries dismissed 600 of its staff. SIPTU balloted for industrial action but, before any such action began, the Labour Relations Commission (LRC), and subsequently the National Implementation Body (NIB) intervened. There was agreement on a range of cuts and the 600 members of staff were reinstated. It was agreed to defer decisions on outsourcing, pending an independent evaluation of Irish Ferries and its financial position.
Irish Ferries was not the first European-based ferry company to endeavour to go this route. In 2003 Viking Ferries, a Finnish-based ferry company announced its intention to re-flag a passenger ferry, Rosella, which travelled a route from Helsinki to Talinn, Estonia. The company intended to re-flag the ship under the Estonian flag and replace the Finnish crew with a lower cost Estonian crew, and, one of the more remarkable features of the case, it intended to make a collective agreement with the Estonian Seamen’s Union. The action was challenged by the Finnish Seamen’s Union (FSU) and by the International Transport Federation (ITF) and, after some negotiation, they initiated industrial action. Viking took legal action through the English courts (as ITF was London based) who found in its favour on the basis that the actions of the FSU and the ITF were in breach of Article 43EC (freedom of establishment; now Article 49TFEU) and article 49EC (freedom to provide services; now Article 56TFEU). This was challenged by the unions and the case was referred to the European Court of Justice (ECJ) which delivered its findings on this case also in 2007 when it found that the right to take collective action, including the right to strike, is a fundamental right. However, the central consequence of the challenge was to make it clear that where a trade union takes collective action which seeks to obstruct the relocation of a business to elsewhere in the EU, this will be potentially in breach of Article 43. The ECJ went on to find that if it is clear that the collective action is because jobs or working conditions are ‘jeopardised or under serious threat’ then it should remain lawful. While there are positive elements to the findings for trade unions, it is thought to be problematic that it will be for the courts (rather than trade unions) to determine when and if recourse to collective action is justified. In particular, the Court of Justice’s requirement that unions exhaust all alternative options before engaging in collective action threatens the autonomy of unions to make their own decision on what is the appropriate strategy to defend their members’ interests (Bell 2008; Donaghey and Teague 2006).
6.4.1. The Dispute
In Ireland, Irish Ferries’ plan was deferred but not abandoned and re-emerged in September 2005 when the company wrote to 543 Irish staff offering them a choice between voluntary redundancy and continued employment at a lower rate of pay. Those who took redundancy were to be replaced by agency workers, primarily from Latvia, who were to be paid €3.57 per hour, less than half the Irish minimum wage. The company intended re-flagging all its ships on the Irish Sea, most likely in Cyprus, it being one of the small number of EU counties without a statutory minimum wage. The workers were given two weeks in which to decide to accept the redundancy, after which they would be paid the lower rate of pay. The company’s action was roundly condemned by trade unions, by all sides in both the Dáil and Seanad and by the vast majority of media commentators. Taoiseach, Bertie Ahern, was highly critical of Irish Ferries, referring to the manner in which the matter was conducted as “deplorable and totally unacceptable in the Irish labour context” (Parliamentary Debates 2005b).
SIPTU, representing officers and a minority of crew members, reacted with anger to the company’s actions. SIPTU branch secretary, Paul Smith described it as “a lesson in corporate greed” and said that his union was left with no choice but to issue strike notice. He pointed out that “we have already agreed to €3.5 million in cuts and the company is holding its market share but it seems intent on using loopholes in the labour laws created by flags of convenience to recruit cheap labour abroad”. Irish Ferries claimed it needed to cut costs in order to increase competitiveness or it would be loss making by 2007. It said it needed to reduce its cost base by €15 million per year (Dooley and O’Sullivan 2005). The leadership of the Seamen’s Union of Ireland (SUI), the other union in the company which represented the majority of ordinary crew members (‘ratings’), though unhappy with the company’s actions, advised its members to accept the redundancy package. This contributed to the already strained inter-union relations between SIPTU and the SUI which had existed for some time prior to this (Dobbins 2005).
Controversially, the Irish Ferries action was supported by the Irish Business and Employers’ Confederation (IBEC) of which it was a member. IBEC Director General, Turlough O’Sullivan asserted that Irish Ferries was highly uncompetitive vis-à-vis other carriers on the Irish Sea and that “most reasonable people would agree that it would be better to have several hundred moderately paid jobs than no jobs” (Keena 2005). Jack O’Connor of SIPTU referred to the IBEC position as “the most daunting aspect of all of this”. The fact that its Director General refused to rule out similar approaches by other employers, citing competition as the reason was an issue of great concern to the unions and a substantial contributory factor to the threat to social partnership (Beesley 2005a).
Irish Ferries refused to attend talks at the Labour Court, despite calls from Government to do so and, in October, on the application of SIPTU, the High Court imposed an interim injunction on the company preventing it from terminating any jobs. Meanwhile, the Attorney General advised the Government that the severance deal put forward by Irish Ferries did not meet the criteria of the Redundancy Payments legislation. He found that the company could not legally claim that the workers were being made redundant because it proposed to replace them with new staff on less pay. If confirmed, such a finding would increase the cost of the scheme to the company. It would mean that departing staff would not be entitled to state redundancy payments, would have to pay tax on any payments from the company and would have delayed access to social welfare after they leave (Beesley 2005b). Subsequent to the Attorney General’s information, SIPTU members in Irish Ferries held a meeting where they voted unanimously to reject the company’s offer. Many at the meeting had already signed acceptances which they now wished to rescind. They claimed that in signing they had acted out of fear (Wall 2005).
The dispute was now “threatening to destabilise the much proclaimed Irish social partnership agreement” (Woolfson 2007). While Irish Ferries was not the first company to seek to replace well paid staff with outsourced agency workers, for a number of reasons, not least the public support of IBEC, it had now become a watershed dispute. The trade union movement perceived the actions of the company and IBEC’s support of them as having profound implications throughout the Irish economy if it went ahead. At the SIPTU annual conference in October, a number of speakers described the battle with Irish Ferries as seminal and one which the union had to win in order to stem a wider trend towards outsourcing jobs and depressing wages (Dooley 2005l). Following the SIPTU conference, ICTU, at SIPTU’s request, decided to postpone the decision to enter partnership talks which were due to commence in November. This decision was taken despite personal assurances from the Taoiseach of the day that his government would do all that it could to ensure the maintenance of employment standards. Speaking about the decision, ICTU’s David Begg commented that the light touch labour market regulation currently in place was no longer sustainable in the context of the opening of the Irish labour market to citizens of the new EU states (Dooley 2005m). At this time, according to a major study of flexibility of employment and working time, Ireland was the third least regulated country out of 16 European countries with Irish firms having some of the least regulated labour legislation covering working time, temporary employment, dismissals, notice and severance pay (Sweeney 1999). The unions wanted this situation to be tightened up and sought specific commitments to measures to prevent exploitation of workers in advance of the commencement of formal talks.
6.4.2. The Services Directive
These high profile disputes in Ireland coincided with a Europe-wide trade union campaign against the introduction of the EU Services Directive, a piece of legislation being spear headed by Irish Commissioner, Charlie McGreevy41, the purpose of which was to create a free market across Europe for the services sector. It aimed to remove legal and administrative barriers for businesses based in one country offering their services in another, and to encourage cross-border competition. Trade union concerns at the Directive centred largely on the ‘country of origin’ principle which stated that a company offering its services in another country would operate according to the rules and regulations of its home country. For example, a construction company based in Poland could offer its services in Ireland, but would operate under Polish regulations. This was a fundamental change in the situation that pertained under the Posted Workers Directive, as discussed earlier in relation to GAMA, whereby workers ‘posted’ by an employer to perform work in another EU state were guaranteed the minimum provisions laid down by law or collective agreement in the host country. Trade unions feared the Services Directive as drafted would lead to a ‘race to the bottom’, with firms relocating to countries with lower wages and the weakest consumer, environmental protection, employment and health and safety rules. They claimed that, under the proposed directive, companies would be able to move their headquarters to member states with minimal protections for workers and treat their employees according to these minimal standards, regardless of where they actually worked. (Erne, 2008; Cremers et al. 2007; SIPTU 2005)
Despite the existence and articulation of some resentment towards immigrant workers from some sections of the indigenous workforce sparked by the Irish Ferries dispute, the leadership of the trade union movement endeavoured to take an inclusive approach to any protests. They focused primarily on the need to uphold employment standards. They insisted that they were not simply defending the interests of long standing Irish workers but that they also wished to protect from exploitation the many newer foreign workers who are open to such exploitation by unscrupulous employers (Krings 2007; Begg 2007). Meanwhile, there was a growing consciousness that this was about more than industrial relations. Mark Brennock writing in the Irish Times commented:
If the idea takes hold that foreign labour represents a threat to Irish workers’ standard of living it could have much broader implications in a state still accommodating itself to its growing multicultural nature. Private companies turning migrant workers into the enemies of Irish workers is the last thing the Government needs (2005).
At a SIPTU march in support of the Irish Ferries workers Jack O’Connor concentrated his attention on the services directive, saying it would allow employers “to transport workers from one end of the EU to the other and impose the going rate in the member state with the poorest conditions”. He stated that the Irish Ferries dispute was symptomatic of a trend where workers on agreed national terms of employment were being replaced by migrant workers on half the rate. “Irish Ferries is providing us with a glimpse of the future labour market if neo-liberal zealots succeed in pushing through their services directive” (O’Halloran 2005). Following widespread union protest at a European level, which Erne (2008: 43) defines as ‘Euro-Democratisation’, the original services directive was rejected by the European Parliament in February 2006 and a new version, minus the controversial ‘country of origin’ principle brought before the Parliament later that year.
In November Irish Ferries, SIPTU and the Seaman’s Union of Ireland agreed to go to the Labour Court which found in favour of SIPTU and recommended that Irish Ferries should honour a three year agreement on pay and conditions agreed with the union in June 2004. In a second recommendation the court found in favour of a Seamen’s Union of Ireland claim that members who wished to remain with the company should do so on their existing terms and conditions. Despite the Taoiseach calling on both parties to respect the decision of the Labour Court, Irish Ferries rejected the recommendation as being “incapable of acceptance and implementation” (Dooley 2005n).
6.4.3. Irish Ferries replace Irish workers
At the end of November the dispute escalated dramatically when Irish Ferries began the implementation of its programme to replace Irish crews with cheaper agency staff from Eastern Europe. They brought agency staff on to the ferries accompanied by security personnel. The Government condemned the action of Irish Ferries. Meanwhile, four ships officers barricaded themselves into the boiler room on one of the ships, the Isle of Inishmore and the company suspended sailings between the UK and Ireland.
The Taoiseach again voiced concern about the possible serious damage the Irish Ferries dispute was doing to industrial relations and both he and Tánaiste, Mary Harney, again urged the company to abide by the Labour Court recommendation. The trade union movement was unhappy with the Government’s proclaimed inability to intervene in any meaningful way to prevent the company from pursuing its intended course of action. SIPTU’s Jack O’Connor said that while he acknowledged that one dispute could not decide the future of partnership, it was difficult to see how the process could survive “if the Government cannot bring itself to address these issues (job displacement, exploitation, the protection of employment standards) in this high profile situation” (Dooley 2005o). Meanwhile, IBEC, in a somewhat conciliatory approach and a softening of its previous position, called for a new partnership deal despite the escalating dispute. It said the circumstances of the dispute were “unique to the shipping industry and have no direct relevance to companies operating in and employing people in this jurisdiction”. It added “extension of the Irish Ferries model into the broader economy, ignoring standards and involving direct replacement of Irish workers by cheaper foreign labour is therefore not something that is desirable or practicable” (Humphries and Reid 2005).
In early December there were further efforts to resolve the dispute through the LRC and the NIB. Meanwhile, on December 9th up to 100,00042 people took to the streets in an ICTU organised national day of protest at Irish Ferries behaviour. This was the largest trade union demonstration seen in Ireland since the tax marches of 1979. David Begg said the march was a “message to every employer in the country, that there is a threshold of decency below which the Irish people will not accept anybody being dragged, no matter where they come from”. ICTU Chairperson, Peter McLoone welcomed migrant workers. He said “we are saying loud and clear that it is not migrant workers who are depressing wages and conditions of employment, it is employers who are prepared to exploit. We want that rooted out and ended” (Dooley 2005p). The trade union leadership was clear that it wanted to minimise any possibility of fostering social tensions or pitching Irish workers against migrant workers (Krings 2007; Begg 2007).
The dispute was finally resolved in mid-December through the intervention of the NIB. The agreement reached allowed Irish Ferries to proceed with the outsourcing of labour, replacing more than 500 seafarers with cheaper migrant labour hired through an employment agency. It also allowed the company to re-flag its vessels to another state. However, all new crew were to be paid, at least, the Irish minimum wage and work fewer hours than originally proposed. The terms and conditions of existing staff were protected, and all crew members had the right to join a trade union. The agreement, which also guaranteed industrial peace, was legally binding for three years (Dooley 2005q).
Just a year later, Irish cabin crew accounted for a mere 1% of the workforce on board Irish Ferries ships. None of the predominantly Latvian, Lithuanian and Polish staff had joined a union. According to SIPTU branch secretary Paul Smyth this was because the union was not able to gain access to the ships to recruit workers and the workers themselves were not coming ashore. "The problem is that the company has worked stringently to ensure those people do not become members", Mr Smyth said. The legally binding agreement expired in 2008, at which point, Irish Ferries was free to pay the outsourced workers whatever rates it chose (Brennan 2006). Irish Ferries' ships currently sail under the Cypriot flag and are not legally bound by Irish employment legislation. They are managed on a contract basis by Dobson Fleet Management, a shipping agency based in Cyprus. All agency crew are employees of Dobson’s (Dobbins 2006). Postscript:
Hello, All, Just to let you know the last Irish ferries ratings directly employed by the company left on the 31st. August 2006. Myself, Anto Murphy, Seamus Collins, and Tommy Kirwan were the last. We put up a good fight but the time had come to bow out gracefully. Thanks to everyone who supported us along the way. It was a good job, the best, but now is only a part of Irish maritime history
(Tony Hayden --- 6th.September, 2006, www.irishships.com)
The Irish Ferries dispute was, without doubt, a watershed dispute in Irish industrial relations. It garnered an extraordinary level of media coverage and Dáil debate. Over the three month period from when it began at the end of September to its resolution in December, there were 309 newspapers articles on the subject, 29 editorials and opinion columns, 25 letters and numerous radio and TV reports. The issue was debated / discussed in the Dail on six separate occasions between October 11th and November 29th.
Figure 10: Newspaper headlines on Irish Ferries dispute
The trade union movement saw it as a sharp demonstration of the need for greater legislative provision and implementation. It awakened the Irish consciousness of right and wrong, resulting in large numbers of people on the streets. The unions became more bullish than they had been for many years. The fact that IBEC expressed support for the Irish Ferries position and action was remarkable and was a significant factor in the undermining of social partnership, that and the Government’s apparent inability to prevent the action, despite being condemnatory of it.