Thursday, February 24, 2005

MoD: Contractorisation and job cut announcement

Full Statement by Chief Minister Peter Caruana

On the 10th February 2005, Mr Adam Ingram the Armed Forces Minister, met the Chief Minister during his visit to Gibraltar. Mr Ingram outlined MoD's reorganisation plans in Gibraltar.

On 14th February the Chief Minister met union officials to brief them on what he had been told by Mr Ingram. On the same day the Government issued a public statement saying that a full statement would be issued by Government after MoD had briefed the unions and the unions and government had met. This has now occurred.

In that statement the Government also expressed its firm opposition to the contractorisation plan and the direct or indirect exportation of local MOD jobs.
The MOD's announced plans are severely damaging to Gibraltar, economically and socially. They are thus unacceptable to the Government which is committed to opposing those plans and to take such appropriate measures as it can to impede the plan and to minimise their economic and social impact, if they are put into effect in the form and in the high handed manner announced by the MOD.

The MoD's Plan

The MOD has simply announced its intentions as a "fait accompli" or "done deal". The MOD has just over 1000 civilian employees in Gibraltar. The MOD's plans envisage the contractorisation of about 600 out of the 1000 jobs, followed by the loss of an unknown number of those 600 jobs by the contractors after the staff is transferred. About 300 jobs could be lost in this way. In addition the MOD plans an unspecified number of cuts in the remaining 400 jobs that would be left in the MOD.
There are several aspects of the MOD's plans, each of which should be separately understood.

1. The "Done Deal"

It is unacceptable that the MOD should simply announce a "fait accompli" without any prior consultation or negotiations with local trade unions. This is not an acceptable way for the MOD to do business in Gibraltar or anywhere else. The Government has no doubt that the MOD would not behave in this cavalier fashion in the UK. Accordingly, the Government formally calls on the MOD to abandon its plan to unilaterally try to impose these measures, and instead to engage local trade unions in a meaningful and sincere negotiation to achieve a reasonable degree of real "efficiency improvements" in a negotiated, agreed and acceptable manner.

Whilst the Government accepts that Gibraltar cannot be exempted from cutbacks that affect the whole MOD around the world and in the UK, the plans for Gibraltar are excessive and disproportionate and represent more than our share of the pain.
Regardless of any issue of contractorisation or job losses, the presentation of this 'fait accompli', without negotiation, is unacceptable and by itself justifies that all sectors of the community in Gibraltar should unite in support of the workers and trade unions affected. The Government has informed Trade Unions of its full support for their opposition to the plans.

2. Contractorisation

Contractorisation is only capable of saving money by reducing the number of employees and by replacing a directly employed labour force enjoying good pay, pensions, job security and terms and conditions of employment, with private sector contractors, sub-contractors and sub-sub contractors, who will engage fewer workers and give their employees less job security, inferior (if any) pensions, and poor pay and other conditions.

The phrase "efficiency savings" or "efficiency improvement" is thus a deception, a mere mask for saving money at the expense of the destruction of economically and socially valuable jobs and hard won conditions of employment.

A genuine policy of "efficiency improvement" would seek to get higher productivity and efficiency from the labour force without destroying the quality of the employment terms. But what the MOD appear to mean by it is to get fewer people, on cheaper terms of employment, to do the same work as is being done now, so that the MOD can spend the resulting savings on ships, aircraft and tanks. This is not "efficiency savings". It is getting workers to contribute to the cost of military expenditure.

Furthermore, in a frontier economy like Gibraltar, contractors and subcontractors will seek to maximise their profits by engaging the cheapest and most 'hireable and fireable' labour. This will inevitably be found in Spain. There is therefore a grave risk that jobs in the military base presently held by locals will be lost and replaced by jobs for non-residents. This would be richly ironical given our support for the military base and Spain's opposition to its very existence.

Indeed, the MOD makes no secret of this. The briefing paper submitted to the Chief Minister states as follows:-

HMG are fully aware of the implications these measures will have for the Gibraltar economy and the effect they will have on future employment especially for the blue collar constituency. Scope for re-employment will be limited and it is likely on cost grounds that some of the new employees to be recruited by the contractor in due course would be from across the border in Spain.

The MOD's plans include the contractorisation of functions representing about 600 of its present labour force of just over 1000, i.e. these 600 jobs will be lost in the MOD and transferred to private contractors.

3. Job Losses

But the destruction of pay, pensions, job security and conditions of employment and possible exportation of jobs through contractorisation is not the only issue that arises. There is also the separate issue of reduction in the number of jobs.
The MOD makes no secret of the fact that it expects that, after contractorisation, the contractor will then make people redundant and cut jobs. The MOD calls this "subsequent job losses through further contractor efficencies."

The MOD has not said how many (of the by then degraded) jobs will go in this way. The figure of 300 out of the 600 to be contractorised has been mentioned. The MOD plans to leave this decision to the contractors, upon which their profit from the contracts will ultimately depend.

The Government calls on the MOD to state clearly and categorically how many of these 600 or so jobs it is willing to allow its contractors to destroy in the name of so-called "efficiency improvements".

Nor is the contractor the only source of intended job losses. The MOD itself intends to reduce what will remain (400 jobs) of its directly employed labour. Again the MOD has not said how many of the remaining 400 MOD jobs it envisages will be lost. The Government calls on the MOD to do so.

It is clear that all 1000 jobs are affected either by contractorisation or threat of job loss. It is not clear whether any jobs will be lost by compulsory redundancy. However, regardless of whether the redundancy is voluntary and regardless of the level of compensation paid to the present holders of the job, it has to be remembered that that job is then lost forever. This greatly reduces employment opportunities for young people and job seekers in Gibraltar. It also translates into loss of PAYE revenue for the Government and (probably) increased expenditure in social assistance payments. The lasting economic and social effects of these jobs cuts extends far and long beyond the consequences for the present holders of the jobs, serious as the latter will be.

4. Government seeks clarification

The Government will oppose the MOD's plans and will take all steps that it lawfully and reasonably can to impede and counteract this plan which is economically and socially regressive for Gibraltar as a whole. In the meantime, the Government has sought clarification from the MOD about several aspects of its intentions, for example: -

-how many jobs will it allow the contractor to destroy?
-how many of the remaining direct MOD jobs will it seek to cut?
-what pension scheme will MOD demand that its contractors provides to its workforce?
-what steps will MOD take to ensure that its contractor is able to pay its creditors, taxes, redundancy payment liabilities etc?
-what steps will MOD take to ensure that local jobs are not exported?
It will not be acceptable for the MOD to wash its hands of these issues and to say that they are up to the contractor. That would be totally reckless and irresponsible, since the MOD is free to impose requirements in any tender.

5. Caution to potential contractors

The Government understands that MOD will seek fixed price commitments and schedules of rates from any successful contractor in manner that any unexpected cost increase is to be borne by the contractor. Companies considering bidding for the MOD Infrastructure Support Provider contract should therefore bear in mind when formulating their contract bids that the Government will be considering a range of legislative and fiscal measures designed to minimise the social and economic impact in Gibraltar of MOD's contractorisation and job loss plans should these go ahead in their present form, and without negotiations and agreement, and that these legislative and fiscal measures may have a significant financial impact on any contractor.


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