Friday, December 09, 2011

The Unilever strike, pensions and structural adjustment

An article for The Guardian about the Unilever strike:

Unilever workers have embarked on the first national strike in the company's history, over the company's attempt to close the final salary pensions scheme, which will result in a 40% reduction in retirement income for many of its workers. The company, in a stunningly inept move, decided to punish the strike by cancelling Christmas parties and bonuses for the workers. Thus, Unilever, a blue chip company that takes pride in its philanthropic past and "responsible" industrial relations policy, found itself branded Scrooge.
Unilever is one of the companies to have weathered the global crisis in robust fashion. In February 2011, its profits were up 18% on the previous year, at some £5.2bn. Labour productivity has always been reasonably high, in part due to negotiated productivity deals with trade unions. Yet, the company is on the offensive against its workforce. Why is this?
Unilever will say that the current pension system is impossible to fund. This was the argument it used in 2008 for closing the scheme to all new entrants, only three years before closing it to existing members as well. The workers argue, though, that the pension fund is financially robust, and that the company itself admits there is no immediate financial imperative driving the cuts.
This is taking place in the context of a record number of firms shutting final salary schemes and replacing them with much less generous settlements. The GMB's negotiator argues that Unilever simply saw an opportunity to follow the trend. But there is probably more to it than that...