The view on here towards the workers in Vita Cortex and their dispute on redundancy payments, is mixed. On one hand, you have workers who, in some cases, have spent a life-time working for a company which was closed in December on the eve of Christmas and have received redundancy pay of two weeks per year of service, paid for by the State in an accelerated payment in February 2012 from the Social Insurance Fund. The workers claim they were promised 2.9 weeks per year of service and say those terms were given to other staff in the Vita Cortex group made redundant. In protest at their treatment, the workers are now on Day 89 of a sit-in at the factory site on Kinsale Road in Cork. They’ve had visits from politicians and celebrities, and messages of support from around the world. They’ve protested outside the Dail, they’ve appeared on the Late Late show and have done a great job of promoting their grievance and they’ve garnered the sympathy of the nation. They’re back at the Labour Relations Commission later today.
On the other hand, it seems to be agreed that the Vita Cortex group company which employed the staff in Cork doesn’t have the money to pay any redundancy. The 0.9 weeks of additional redundancy payment are said to be worth a total €374,000.The case has already come before the LRC which said “NAMA have to be careful that they also, in their circumstances, are not diluting assets to the benefit of someone who is in NAMA and who probably, privately, has the capacity to pay”. It seems that the wider Vita Cortex group is prepared to making some ex-gratia payments available to the workers – totalling €180,000 according to reports last week, but this offer has apparently been declined.
The “mixed” view comes from the fact that the Vita Cortex group company doesn’t have the funds to pay the redundancy – that has been established by the LRC – and although the 32 workers have put in a total of 847 years of service (an average of nearly 30 years apiece) the sit-in may be preventing some of the younger workers from moving on with their lives.
Meanwhile AIB to which this State has given €20bn during the past three years is making 2,500 of its 23,000-strong workforce redundant and the banking union, the Irish Bank Officials’ Association is negotiating between 5-6 weeks redundancy per year of service. Or to put it another way, if the 2,500 staff have an average of 20 years service each and annual salary of €70,000 they are set to get a total of up to €404m, compared with €60m if they were paid the basic statutory two weeks which is subject to a maximum of €600 per week, as has happened in the case of Vita Cortex. There are suggestions that the AIB deal might also involve some additional concessions to staff with AIB mortgages.
There seems to be something deeply unfair in the disparity of treatment – workers in a manufacturing concern in Cork which was allowed go bust get one third of the compensation that workers in Dublin (mostly) get in a business which would be bust to the tune of nearly €20bn, were it not for state assistance.
NAMA Wine Lake 
You could also point out the difference in the treatment of peoples pensions in Waterford Crystal V Anglo as Colm McCarthy did recently. One law for the bankers.
@ Eamonn The Waterford Glass pension issue is going to Court shortly. The workers’ case is based around the failure of the previous Government to transpose certain EU directives around pensions into Irish law.
Losing the case is likely to cost the State up to €4,000M.
@Niall
Maybe but the interesting thing was the reaction of the state when a glass factory and their pension went bang and when a bank and the pensions associated with it went bang.
@ Eamonn The problem was perhaps not so much with the State, rather those elected reps of the people. The failure to bring the appropriate directives into Irish law was very much a political one. In the case of Waterford Glass, the main shareholder was of course also the largest shareholder in Independent News & Media.
Below is a link to a very good piece on the Waterford Glass pension issue by Kathleen Barrington, who of course is now media advisor to the Minster for Social Protection.
http://kathleenbarrington.blogspot.com/2009/11/private-sector-workers-are-now-treated.html
She also wrote extensively on pension issues in the past, but you will need a subscription to the Sunday Business Post to read them.
The Rosenthal workers in Germany, also part of the same group, had their pensions protected in full because under German law you cannot reduce your net assets below your pension liabilities.
By the way I agree fully with you
I think what irritated the tits off them was that plant&machinery was transferred out earlier on, during the late summer I believe.
Are you seriously suggesting that ordinary employees of AIB who had no hand, act nor part in the disastrous decisions that led to the collapse of the economy, should be penalised in their redundancy payments? Six weks per year of service is not unusual in large companies. The disgrace is that other workers have to make do with less, not that AIB workers are being paid too much. I also find the snide anti-Dublin tone of this article very unpleasant. Correct me if I’m wrong but AIB is a national company with offices right across the State.
@ NWL, you are correct, the AIB redundancy arrangement raises many questions. I hope you are not proposing to drag all down to the lowest legal level. The average salary you assume is perhaps a bit high and of course the IBOA are only representing their members’ interests. however to get down to the core points,
1) A good proportion of the staff leaving, are members of the Defined Benefit pension scheme. Early leavers will surely crystallise substantial additional liabilities in the pension fund, already heavily underfunded.
2) AIB had a practice of lending staff many multiples of their salaries in mortgage loans. I personally saw mortgage loans seven times a person’s annual salary. This effectively turned the staff into indentured labourers. This practice did not exist in Bank of Ireland.
3) From 1 January 2005 the maximum earnings taken into account in the calculation of statutory redundancy lump sum payments are €600 per week (€31,200 per year). Therefore statutory redundancy would come out at €61.5M (2,500 X 41 weeks X 600), not €135M.
The discussed offer, four weeks per year’s service plus statutory with I am presuming a ceiling of around two year’s salary is fairly standard, even now. However I do agree, AIB is of course a complete basket case.
However I think the pension liability issue, if mainly older staff take the deal, may be more problematic and costly. I would like to know a bit more about that.
In the case of Ulster Bank, it was mainly branch staff who were hit as their branches were being closed, leaving them with the choice of a transfer or taking the package. I think it is fair to assume the same will happen with AIB. Imagine you are settled in Castletown Berehaven, the branch is closed, no vacancy in the nearest branch in Bantry 38 miles away. Redundancy is not very voluntary then.
@Niall, thanks for that. You are of course right with the statutory limit of €600 per week and that has been amended above. The aim of the above blogpost is to draw attention to the disparity in treatment – manufacturing, Cork based, not needing state bailout looking for 2.9 weeks max versus banking, predominantly Dublin, needing a €20bn bailout looking for 6 weeks. There’s no editorial view on the ethics/fairness, you can make your minds up yourself.
Free Market: a MANUFACTURING company goes bang and the long serving staff get screwed.
State Socialism:a ZOMBIE BANK doesn’t go bang and the long serving staff don’t get screwed.
For all those AIB commies – how much redundancy would the 23,000 of you have got in 2008 after your “brilliant” management ran up a €20,000,000,000 loss?
Certainly there is “something deeply unfair in the disparity of treatment” whether you see it as manufacturing workers getting too little or bank staff getting too much. But that kind of unfairness is nothing unusual. The root cause of much injustice is that banks are remarkably well placed to choke the life out of the economy. How often have we heard that we must submit to ECB demands because these guys can shut down the ATMs? Well, bank officials can shut the ATMs pretty effectively too.
WhatGoesUp, you seem to be confusing lemon socialism with state socialism.
Nope.
All the Irish banks were atrociously run businesses that should have been left fail.
On September 29th 2008 they demanded, and got, a meeting with Brian Cowan and Brian Lenihan and told them “L’état, c’est moi” – and the politicians agreed.
So they socialised the losses and nationalised the banks.
Staff that should have paid the price for their management’s colossal failure will now squeal for their state handouts.
So the avowed capitalists of the Celtic Tiger are the committed socialists of the Gaelic Leper.
Who says a leper can’t change its spots?
It’s largely a cultural/political inheritance. A bank job was seen as ‘safe’ in exactly the same way as a semi-state of PS post, with the additional perk of special credit facilities. Permanent and pensionable.
The resulting sense of security and status was one of the reasons why rank and file staff never questioned the crazy risks being taken by the ‘higher ups’. Outsiders will regard the redundancy deal as unfairly generous, while many of the recipients will regard the very notion of redundancy as outrageous. A good package will buy a lot of silence.
As an AIB employee and as a committed follower and supporter of your blog, I am now torn. Please consider the people involved in both scenarios rather than the blunt instrument used to displace them. I have over 22 years service in AIB. I am middle management and considerably below the 70,000 salary you suggest as an average for redundancy. So are the vast majority of my colleagues who work in call centres, in branches and administration. Like the Vita Cortex workers, these people are just as disenfranchised and disaffected by what has happened to our country over the last 4 years. I fully support the Vita Cortex workers struggle for a better severance package. In my opinion, they should be entitled to 6 weeks redundancy and more. These people are further collateral damage in a crisis that continues to regard the interests of a small few above the interests of many.
2500 redundancies is not a bank bailout. Its another 2500 families losing their income as a consequence of corporate greed and government negligence…..long after those who actually were responsible have been pensioned off without sanction.
You are wholly justied to treat these institutions and their owners with derision. But please dont imply that an industry standard severance package for 2500 cashiers, call centre operators and office staff is somehow less deserving because they work in a state backed bank. These husbands, wives, fathers and mothers are struggling as much as anybody in the current economy without being constantly badgered for having the misfortune to be employed by a bank in 2012.
Please keep your disdain for those who created this mess….and for those who continue to profit from it.
Thank you.
I enjoy reading this blog and “assumed ” that it was non biased in all its commentarys. Pretty shocked to hear your comments on AIB, quite a few a skew here. Average salary ??? I am not sure where on earth you pulled that from, well off the mark here. Again the number of staff, well of the mark here. Equally well off the mark re suggestions that concessions will be for those that have staff loans etc.
Yes i have insider knowledge of the above, however pls bear in mind as you banker bash here that most of those responsible are well gone out of aib on payoff’s that only current staff would dream off. Bit like those in central banks, departments , regulators etc
Make me wonder about the veracity of your other posts/commentary and so called independent opinion …
@timmy
(1) Average salary was taken from this article in the Irish Times which said that the 2,500 redundancies were required “in a bid to cut annual payroll costs by €170 million” – €170m / 2500= €68,000.
http://www.irishtimes.com/newspaper/breaking/2012/0308/breaking22.html
(2) Number of staff – 2,500 redundancies have been widely reported, for example in the IT article above. The number of staff at AIB, 23000 was sourced here
http://www.aib.ie/servlet/Satellite?c=CSRContent_C&cid=1177399129961&pagename=CSRPortal%2Fcsr_main
(3) Suggestions about concessions on staff loans is based on statements that €2bn is owed in mortgages by AIB staff (plus €0.5bn in personal loans) and this is plainly in the mind of the IBOA which will try to protect its members as best it can.
You’re welcome to your conclusions but the purpose of the above blogpost was to compare and contrast the treatment of the Vita Cortex who had another inconclusive meeting today at the LRC, with the imminent fate of AIB workers.
The annual payroll costs will include employers PRSI and pension contributions, so these should be subtracted from the €70,000 figure.
As a former bank employee myself, I think that your view is entirely reasonable.
Most people who lose their jobs cannot be blamed for the fact.
I would add that the whole idea of being compensated for the loss of something that so many other people, most equally blameless, do not have, is grotesque.
The Vita Cortex workers are, by some standards, lucky.