John Harris

Journalist & Author

Unilever row over pensions, profits and executive pay at Port Sunlight

Marmite, Pot Noodle, Persil and Walls among lines hit as Unilever workers go on strike in first of 10 days of action

The industrialist and Liberal politician William Hesketh Lever began building the Wirral village of Port Sunlight in 1888, 42 years before his family’s company amalgamated with a Dutch margarine firm to become Unilever. It may have predated the current obsession of the British political class with “responsible capitalism” by well over a century, but Port Sunlight embodied the same essential idea: Lever’s quest to “socialise and Christianise business relations” via beautiful housing and culture for all.

Had Lever come back to his home turf on Wednesday, he would presumably have been dismayed. Yards away from the old Lever Brothers factory and the village’s manicured lawns, a 100-strong picket line-cum-demonstration was in full cry.

This was the first act of a 10-day rolling strike involving 2,500 people, focused on an issue much beloved of Lever himself, and now firmly built into the national conversation: pensions. Having closed its final-salary scheme to newcomers in 2008 but assured its remaining beneficiaries that it would stay open for them (and increasing their contributions just to prove it), Unilever now wants to transfer its entire workforce to a less costly career average revalued earnings (or Care) plan. Following the lead set by numerous big corporations, the company claims final-salary schemes represent a “broken model”. But the unions point to huge profits and generous treatment of executives, and fear that the Care proposal will lead to much less dependable pensions arrangements.

There are shades here of the pensions dispute that has lately gripped the public sector, but no sign so far of any equivalent progress. Unions have proposed measures to save the final salary scheme, to no avail. The company says that its closure is non-negotiable, and talks have broken down. After a vote with a 67% turnout and 85% in favour of striking, the first national Unilever stoppage took place on 9 December last year, affecting a mind-boggling array of famous brands – and the latest plan drawn up by Unite, the GMB and USDAW once again reads like a wave of action sweeping through the shelves of a supermarket (or, if you prefer, something of an industrial soap opera).

At Purfleet in Essex, people walked away from the production lines responsible for Hellmann’s mayonnaise, I Can’t Believe it’s Not Butter and Flora. There was also a stoppage at the home of Colman’s mustard in Norwich. The action will hit Pot Noodle, PG Tips, Marmite, and Wall’s ice-cream. At Port Sunlight, people whose working lives are bound up with Comfort fabric conditioner and Persil liquid are scheduled to strike on Friday. On Wednesday, it was the turn of the same site’s R&D division. So there they stood: process technologists, prototype developers, formulation scientists, specialists in “bleach catalysis”, and more. They talked about cuts in their future retirement income of up to 20% – in some cases, say the unions, as much as twice that – and the company’s broken guarantees. But there were also complaints about increasing pressure on an ever-smaller workforce, and a massed lament for the legacy of the company’s British founders.

“It used to feel like an ethical company,” said 44-year-old Cathy George, a secretary and single mother who has worked for the company for 16 years. “But everything’s changed. It’s more ruthless now.”

“They used to look after us,” said Lesley Griffiths, 49. “They don’t any more. I’d say it’s changed in the last year.”

“The directors aren’t going to be affected by this, but we are,” offered another. “They say it’s only going to make a difference of 20%. But that’s a lot of money for us.”

So far, most of the coverage about the Unilever strikes has focused on the increasing rarity of final salary schemes, and the unions’ supposedly ill-advised attempt to cling to one. The strikers counter that such talk overlooks not just Unilever’s huge profits – £6.1bn at the last count, up more than £1bn on the previous year – but bad decisions taken in the recent past. Certainly, the company’s £680m pension fund deficit is at least partly traceable to its decision to fall in with corporate fashion during the boom years of the 1990s, and take a seven-year pension holiday for both company and staff that only ended in 2002.

There is also the question of whether a move to Care pensions will eventually be followed by Unilever’s staff being pushed into an even less generous scheme. Company documents obtained by Unite show that the Unilever’s global pensions policy enshrines defined contribution schemes (whereby the value of any pension is not guaranteed, but down to how much money has been paid in, how much a pension fund has grown, and the annuity rate available at retirement) as the company’s “preferred pension benefit design”. The company claim this is a “framework rather than a mandatory policy”, but the unions smell a rat: they say that Unilever will only commit to Care pensions for three years, which leaves the way open for yet another downgrade. For the last recorded financial year, Unilever’s CEO, Paul Polman, was paid a basic salary of more than £900,000, and a bonus of £1.45m, as well as £900,000 in free shares and a £300,000 contribution to – you’ve guessed it – his pension. But in November last year, he said this: “What I want is a sustainable and equitable capitalism. Why can’t we have that as a model?”

On the picket line at Port Sunlight, one Unite activist said such talk amounted to “absolute bollocks”. The problem, as some of his workers see it, is that he is cutting them loose from the very values he affects to believe in.

Half an hour’s drive from Port Sunlight, 30 or so workers from the Unilever plant that makes Persil and Surf washing powder were also on strike. At around 1pm, they received word that having seen their banners on Twitter, the company wanted them removed from the factory’s outer wall. One of the choicest was moved to other side of the road: “Unilever hangs Persil workers out to dry.”

Standing sentry outside the factory was Mark Armitage, a 45-year-old process operator and GMB steward, who angrily recalled how his pension contributions went up from 5% to 7%, supposedly to keep the final-salary scheme open. “We were told that if we took those measures, it would safeguard it,” he says. “That was three years ago; they then told us they couldn’t afford what they’d agreed. But that’s got nothing to do with it: this is all about a global policy they came up with behind closed doors. That’s what we’re angry about. This is a company that’s making billions, and we’re not asking for anything more than we were promised.” His gut feeling, he said, was that there were more strikes to come.

Whether what he said next was intended to evoke Lever wasn’t clear, but it sounded like it. “The company shouldn’t be doing this,” he said. “They should be leading by example.”

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