Unite’s Brian Gallagher was handed a poisoned chalice when negotiating job cuts with Aviva, but the union official scored a victory by cutting the number of redundancies and securing 220 jobs for Galway, writes Kyran Fitzgerald
IT HAS been a strange week at Aviva Ireland.
The boss of the UK parent, Andrew Moss, walks the plank following a shareholder revolt. Around 60% voted against a proposal to hike the CEO’s basic salary above the £1m (€1.25m) mark — this following a one-third fall in the Aviva share price.
Moss, however, does depart with a £1.5m golden parachute.
Closer to home, staff received final details on the long-awaited redundancy programme, but the level of planned job losses at the Irish business turns out to be less than expected, and 220 new posts are to be created in Galway.
Still, 550 people will be walking out into an uncertain future over the next 18 months to two years.
Nonetheless, for Brian Gallagher, the union official negotiating on behalf of Aviva staff, this represents a real result.
The new customer service jobs in Galway could be the start of something much bigger, Gallagher believes — around 3,000 people are employed in similar positions in two major UK centres.
The group has been ”inshoring” call centre work back from India — to where 450 Irish posts were exported in 2008. It seems customers prefer to deal with native English speakers. People with Irish accents rank well in surveys, behind Geordies and Scots.
Gallagher believes that, long-term, the Galway centre could command up to 1,000 jobs. It is, however, too soon to start counting those extra chickens.
Last October, when Aviva first unveiled its job-shedding plans, there was real shock. The FTSE 100 company, the largest insurer in Britain, appeared to be really giving Ireland the thumbs down as 770 jobs at Aviva Ireland were to be axed, along with 180 posts at Aviva Europe. That business only recently transferred to Dublin in a move to minimise tax payments and avoid heavy City of London regulation.
Gallagher appeared to be negotiating from a position of considerable weakness. Management raised the possibility of customer service jobs, but on condition that remaining employees accepted a pay cut.
The task of negotiating departure packages was not made easier by the Government-led crackdown on banker severance payoffs in the financially broken, nationalised sector.
Gallagher himself belongs to a trade union which is, to say the least, something of a curate’s egg. In its current manifestation, it is the product of a merger of UK-based unions, the TGWU, (the Transport and General Workers’ Union) and MSF, the latter being a finance and technical workers’ union.
As a result, in Ireland, Unite is a curious mix of traditional manufacturing, insurance and banking, and parts of the public sector. It is the only union representing staff at the University of Limerick, for example.
Its leadership, under former Waterford Crystal union official Jimmy Kelly, has traditionally opposed national pay agreements. Unite recently proclaimed its opposition the fiscal treaty ahead of the May 31 referendum.
However, its finance wing is more pragmatic. Gallagher declines to express a personal opinion on the upcoming referendum.
The union official has played a defensive game since October, trying to persuade management of the benefits, reputational or otherwise, from retaining the maximum number of jobs in Ireland. He has had to deal with his members’ understandable emotional response to the announcement, leaked to the media rather than communicated directly.
Following such news, unions, must go through an initial grieving process before taking more practical steps, he says.
“One has to let members vent their anger. One can’t go into negotiations when members still have pent-up anger. You have to go through a period when the statements that we are making do not help the situation. Once that is out of the way, it is down to rebuilding relationships with the company.”
Once the talking begins, Gallagher believes it is best to approach the discussions on the basis, initially, of “absolute trust”. If that trust is broken, then, “there are serious consequences”.
The process of negotiation and tick-tacking with union members has been complicated by the advent of email and social media.
“In the old days, a crisis between the parties would develop over weeks. With email, things can go badly very quickly as mails are exchanged.”
In the case of Aviva, Gallagher believes the union managed to secure a shift in the opinion top management held towards the restructuring exercise, but this was not achieved overnight.
“This must be one of the most complicated set of negotiations we have engaged in. Management had a preconception about the Irish — that they were overpaid, the unions held too much sway and were not willing to work constructively.”
“The British management come from a preconceived position about Ireland being too expensive. There is a differential when you take the exchange rate into consideration, but pay rates in Ireland are not too high.”
Gallagher and colleagues eventually sold the idea of Galway to Aviva on the basis that it is a university town with an available pool of talent. Several employers have bought into this notion in recent week, with jobs announcements.
The Unite official, however, warns against the idea that this improved news from Aviva represents a turning point for the sector.
With more than 4,000 jobs to go at AIB, Bank of Ireland, and Ulster Bank, the real impact of the disappearance of those pay packets from the economy has yet to be felt.
The ability of departing staff to meet huge loan commitments represents a “real-time bomb”, in his view.
While confident that the general insurance sector is over the worst in terms of job losses, Gallagher has real concerns about possible layoffs among life and pension companies, given the fall-off in numbers investing in pensions and life policies.
Unite recently negotiated a major restructuring deal with management at Irish insurer FBD. Gallagher regards Allianz and Axa as “well-managed and positioned”. Zurich is going through a transition, but without major job-shedding being anticipated.
This leaves the life business. The problem is the sheer impact of the downturn on a business that relies on a buoyant domestic economy.
The irony is that when the young Brian left school back in the early 1980s, banking and insurance was the sector every mother sought for their son, a sector offering jobs for life.
Brian joined the old Insurance Corporation of Ireland in 1980 as an underwriter. After four or five years, he was appointed shop steward.
“I always voiced opinions on pretty much everything. I was nominated in my absence. no one else wanted the job.”
Gallagher became a full-time official at the age of 29. On his first day, he found himself on the picket line out in Sandyford, representing striking staff at the Central Bank mint. The group were blocking trucks carrying bullion. Suddenly, the pickets realised that there were soldiers on the trucks carrying weapons.
“I had guns pointed at me on my first day,” he laughs. “Life was a bit calmer after that — more smoke-filled room than smoking gun.”
The 1990s was a good time for finance workers. “People were earning good money. Taxes were falling. We started to explore profit sharing.”
In the bubble years of the 1990s, people would laugh at 10% pay increase offers. But in 2008 came the downturn.
The first wave of redundancies, however, was much less painful. “People aged 48 got a year’s salary before retiring on full pension at 50.”
All is changed utterly now. Those sweet deals are long gone.
At Aviva, the union has secured six and a half weeks’ severance per year of service.
Looking ahead, Brian is cautious about the country’s prospects, warning it could take three to four years — after the next election — for recovery to kick in.
It seems that the negotiation skills of this union official will still be in demand for quite some time to come.
Factfile Brian Gallagher
* Born: 1962, Dublin.
* Education: Terenure College.
* Career: Insurance Corporation of Ireland — 1980-91.
* Shop steward: Mid 1980s.
* 1981 to-date: Full-time official MSF, later Amicus, now Unite.
* Family: Married to Ursula; four children; two grandchildren.
* Residence: Walkinstown, Dublin.
* Leisure: Golf, reading.
© Irish Examiner Ltd. All rights reserved