Aer Lingus staff will receive a pay rise of 3 per cent, lump sum payments of up to €4,400 depending on service and a new 7.5 per cent profit sharing scheme following the airline's flotation in the autumn.
Details of the pay rise of 3 per cent, which is in addition to the 10 per cent recently agreed as part of the national partnership agreement, were included in a final offer made by airline management last week, in talks ahead of the flotation.
The airline has agreed that up to 7.5 per cent of its profits each year will be transferred to the Employee Share Ownership Trust (Esot) to buy shares. This will ensure that the unions at the airline avoid having their stake diluted from its current 14.9 per cent. The Esot will also retain its full voting rights.
The 3 per cent pay increase will take effect one month after the airline's initial public offering (IPO). The lump sum payments range from €400 to €4,400, depending on how many years of service an employee has. Employees with five years' experience will get a €2,400 lump sum for instance, while those with 25 years will get €4,400. The lump sum payments will only be paid once targets at local level are met.
The management has agreed that fixed-term or contract employees will not exceed 25 per cent of the workforce in any department and all outsourcing plans have been scrapped.
The offer has been presented as a "full and final settlement of all outstanding pay claims".
It is reported that Aer Lingus chief executive Dermot Mannion has written to SIPTU National Industrial Secretary Michael Halpenny saying that management is prepared to calculate the number of fixed-term contract employees in each department to make sure that this does not breach the 25 per cent rule.
An employee charter governing the relations between management and unions has also been circulated.
In addition to the inducements, two supplementary funds are to be set up, to address the deficit at the Irish Airlines (General Employees) Superannuation Scheme, which Aer Lingus staff are members of.
The first fund will consist of €70 million raised from the IPO, while the second fund will consist of €34 million also raised from the flotation. Employees are also being asked to increase their pension contribution by 2 per cent. The company will increase its contribution by an additional 4 per cent.
The airline has said that anyone employed before the IPO will not face "less beneficial conditions of service or remuneration" following the listing of Aer Lingus shares on the stock exchange.
The airline's prospectus is said to be close to completion, although it is likely to undergo further drafting in the run up to the IPO.
The floatation is expected in the autumn but volatile market conditions could delay it further.
The contrast with many Irish private sector workers
Last week, it was reported that the Irish public service salaries have risen by 59% in the past five years and the payroll has expanded by 38,000 extra staff.
Increases in public sector over the period due to general rounds total €2,479m (or 24.3%), “special” pay increases (primarily Benchmarking) total €1,328m (or 13%), and other factors (such as extra numbers) total €2,193m (or 21.6%).
The increase in the average industrial wage for a male worker in the period 2001-2005, was 19%.
The Exchequer’s annual wages and pensions bill increased sharply from €10.2 billion in 2001 to €16.2bn last year, with what has been termed "benchmarking" accounting for up to €1.32bn of the rise.
The number of public servants grew by 38,760, or 18%, since 2001 to 257,013 last January.
The Department of Finance’s recent review of the Sustaining Progress and benchmarking initiatives found they had “contributed to the virtual absence of industrial disputes and disruptions in the public service”.
“It has also been particularly successful in securing commitment to co-operation with flexibility, ongoing change and implementing a modernisation agenda from the groups covered by the parallel benchmarking exercise,” the report stated.
