'No pay cut after 62' deal struck

Almost half of all unionised workers in petrochemical industry will benefit

By Elgin Toh, The Straits Times, 5 Nov 2011

CLOSE to half of all unionised workers in the petrochemical industry will not suffer a pay cut when they are rehired at age 62.

The bonuses of these 2,500 workers will also remain intact.

This departure by 14 oil companies from a common practice was announced yesterday by two unions, the United Workers of Petroleum Industry (UWPI) and the Singapore Shell Employees' Union (SSEU).

The UWPI, the main union in the sector, sealed the deal in a memorandum of understanding (MOU) it signed yesterday with 13 companies.

They have agreed to keep the workers on the same salary until age 65, instead of doing what larger companies tend to do: cut a rehired workers' pay and not give any bonus.

With the re-employment law taking effect less than two months from now, UWPI general secretary K. Karthikeyan said he was extremely satisfied the companies signed the deal even though the law allows for some cuts in salaries.

He added that one main reason for the outcome is that his union agreed more than 20 years ago to move gradually away from the seniority-based wage system.

As a result, the wage differential in the sector between the highest- and lowest-paid workers in the same grade has fallen from 2.6 times in 1986 to 1.5 times.

Singapore employers have typically argued that salary cuts are needed for rehired workers because the seniority-based wage system has inflated the salaries of older workers.

The Singapore Shell Employees' Union told The Straits Times it reached a similar agreement with oil giant Shell a few months ago.

Together, the agreements cover about 44 per cent of the industry's unionised workers. The only conditions for rehire are that the worker is medically fit and has achieved satisfactory work performance.

Union members like technician Tan Teck Heng cheered UWPI's success.

Said the 60-year-old, who works for petroleum additives giant Infineum: 'It's great news and very encouraging to workers. I've worked here for 23 years and every day, I climb six storeys up and down two or three operating plants to carry out maintenance work.

'I'm fit and it is right that I should be paid the same if I continue to do the same work.'

Minister for the Environment and Water Resources Vivian Balakrishnan, who was present at the MOU signing as adviser to UWPI, praised the employers for being 'enlightened'.

It is a win-win outcome because companies benefit from the loyalty and experience of the rehired workers, he added.

At least three of the 13 companies will not take away any perks. They are Infineum, Oiltanking and Vopak Terminals.

Others are cutting back some benefits such as medical insurance and annual leave, especially if the worker's leave had increased because of seniority.

Mitsui Chemicals, for instance, said it will give its rehired workers a sum equivalent to the insurance premium because it can no longer offer them term life insurance as its insurer had imposed an age limit on the workers covered.

UWPI is now negotiating with another 13 companies and is confident of getting nine of them to agree by the end of the year to rehire without a pay cut.

The remaining four are holding out, with some wanting the pay issue to be left open and not included in the proposed agreement.

But Mr Karthikeyan is not backing down. He said: 'If they want to cut pay, we are ready to go to the Manpower Ministry for arbitration.'