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Workers strike over company pensions scheme

A new era in British industrial relations began on Friday 18 July 2003 as workers at the French-owned company Rhodia walked out in protest at the closure of the company's final salary pension scheme to new members.

July 1, 2003
4 min read

Over 600 workers at the company’s chemical manufacturing plants in the West Midlands and Cheshire are striking in a dispute over changes to Rhodia’s pension arrangements.

The strike, organised jointly by Amicus and the GMB, is the first time that British workers have gone on strike to defend final salary company pension schemes. BAE Systems and Rolls Royce have previously backed down over proposed benefits reductions following the threat of strikes.

Unions are angry that Rhodia is closing its final salary scheme to new entrants and claim the company took a partial “pensions holiday” over the last three years.

GMB leader Kevin Curran, said: “GMB members know that closing the scheme to new entrants puts the long term viability of the scheme at risk. Their security in retirement is being put in jeopardy by the decisions being made by the company now.”

Rhodia denies endangering the company’s pension scheme, arguing that union claims that the company took a contributions holiday are “unfounded.” After taking over Albright & Wilson in March 2000, Rhodia claims it increased the level of employer contributions for former staff, and made large cash injections to correct the pensions deficit it inherited.

Rhodia’s UK HR Director, Bob Tyler argued that closing the company’s pension scheme “does not affect the pension provision of current employees in any way.”

He added: “We are closing the final salary scheme to new members to protect the interests and benefits of current Rhodia employees and ensure the future security of the fund.”

Unions are planning further strike action at the company’s plants in Oldbury and Widnes for dates in August and September.

The Rhodia strike is the first time since the collapse of the stock market that British workers have walked out in protest at changes to their pension scheme.

It comes after thousand of French workers went on strike in June over reforms that would increase the pension contribution period for all workers to 41 years by 2012. And in May, Austrian workers staged the first general strike in decades at government plans to extend the period of pension contributions from 40 to 45 years and reduce benefits.

Many in the UK union movement believe pensions will be a growing issue of contention in coming years. In a recent survey, 90% of Amicus members said they would be prepared to take industrial action if their employer stopped contributing to their pension.

Emily Thomas, spokesperson for the GMB, commented: “Our members are becoming more aware of this issue, and it is becoming an integral part of negotiations on terms and conditions.”

“Lots of companies took pension contribution holidays. Some are now putting in double to make up for it. Others are using the stock market as an excuse, and are saying that putting more into pension schemes is not sustainable.”

Some in the union movement are calling on the government to bring in tighter regulation to ensure companies contribute to final salary pension schemes.

The government announced proposals in June, following consultations on the Pensions Green Paper, to safeguard the rights of workers with occupational pensions schemes. These included funds to protect pension rights when a company goes bankrupt, and the full buy out of pension scheme members when a company chooses to wind up its scheme.

Critics argue such measures are not enough. Lee Whitehill, spokesperson for Amicus said: ‘the Government should make it compulsory that employers make pension scheme contributions.”

He added: “We would like pension schemes to be seen as a form of deferred payment. It is money you have worked for. And we believe workers should get the same rights as other creditors if a company goes bankrupt.”

Emily Thomas of GMB agrees. She believes the UK needs: “mandatory standards for pension schemes. Companies keep reducing contributions and then blame problems on the stock-market. Pensions are a three-way responsibility: government, individuals and companies. Workers will only get security if everyone contributes what they should.”

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