Wednesday, 26 May 2010

We need to look at the implications of pensions black holes

BT has become the latest company facing industrial action and the discontent of its workers. According to BBC News, the dispute centres around pay negotations, with the CWU demanding a 5% rise whilst BT has offered 2%.

It appears that "the row over the pay offer could be inflamed by confirmation of a £1m bonus for BT chief executive Ian Livingston." As CWU deputy general secretary Andy Kerr puts it, "it's my members that actually deliver those targets for Mr Livingston and co. so if it's good enough for him it's good enough for our members."

This is a point often overlooked by critics of worker organisation and strike action. Livingston is being rewarded because BT "had returned to profit, making £1bn ($1.45bn) in the year to 31 March." But he hasn't delived that profit, the workers have.

This despite 35,000 job losses at the company in the past two years and a slew of new procedures which only made their job harder. Last year, Livingston apparently "turned down a pay rise of £50,000," but this doesn't change the fact that it was on the table whilst the workers had to make do with a pay freeze. In light of the fact that the Consumer Price Index (CPI) is at a 17-month high, and that the Retail Price Index (RPI) "hit 5.3% in April on a year-on-year basis, up from 4.4% in March and the most since July 1991," this is nothing short of an insult to staff.

Indeed, in light of this, a 5% pay rise is a rather moderate request. Indeed, factoring in the pay freeze and the previous RPI of 4.4% this still amounts to a 4.8% pay cut in real terms. Whilst the chief executive pockets a bonus worth two times his salary and walked away last year with a £343,000 shares bonus.

And what of the fact that "BT is also battling to reduce a giant £9bn pension deficit?" It will take BT 17 years to get rid of this deficit, a problem also faced by Royal Mail (£8bn), British airways (£3.7bn), local councils (£60bn), Cadbury (£12bn), and many other employers. This is often mentioned when industrial disputes arise, perhaps to add weight to the argument for whatever job losses or spending cuts workers are fighting, but the fact is that bosses have only themselves (and perhaps Margaret Thatcher) to blame.

The Thatcher government introduced the concept of "pensions holidays," allowing employers to simply renege on their contributions for as long as they choose. (And, I hasten to add, the obligation to such contributions was laid out in contractual agreements, the sacred cow of the free market right when it happens to benefit employers.)

Delighted by this and consumed by the ultra-short-termist thinking that blights all corporate entities, many employers immediately leapt into the scheme. Even when the inevitable news that this was resulting in a massive pensions crisis hit home, employers carried on taking the "holidays."

There are two implications to this.

The first is that any argument in favour of employees bearing the cost of economic recovery is an argument for theft. When bosses already owe their workers so much, the answer is not to keep taking more. If cuts must be made, then those responsible for the financial decisions (i.e. shareholders, board members, and chief executives) must face them rather than workers.

But then, most ordinary people will have already come to that conclusion. The second implication is much more revealing. As John Band, via the Devil's Knife, explains in relation to British airways, "more than half the company is already owned by the workers, and if things were to get worse then the pension fund has priority over the shareholders as a creditor." Thus, if BA had to go into administration as a result of the current disputes, "it’d be hard work to rebuild BA as a global brand after that kind of collapse, but it wouldn’t be impossible – particularly with worker ownership ending the company’s labour crisis overnight."

This is an extremely interesting point, especially from the point of view of an anarcho-syndicalist. Not only is it the perfect rebuttal to companies trying to maintain profits at the expense of their workers whilst massive pensions black holes exist, it also offers a way to argue and push for worker self-management within the current system as well as without it.

The question now is whether the working class can seize upon this point and make precisely that argument.