NEW ORLEANS — The AFL-CIO pledged to fight for severance pay for former workers of fallen energy giant Enron and called for pension and bankruptcy reforms in the wake of its collapse, a wire service reports.
“Enron used the bankruptcy court system to cut most of its former employees off with practically no severance pay,” AFL-CIO Secretary-Treasurer Richard Trumka told reporter.
Trumka was joined by a group of former Enron workers who said they received no severance pay when they were laid off by Enron Corp. which filed for bankruptcy on Dec. 2.
Former Enron worker Debra Johnson said her employee manual stipulated that laid off employees should receive up to $30,000 in severance pay but that she had received nothing to date.
“Now I don’t know where my next income is going to come from,” she said, adding that she has not been able to make ends meet with her unemployment checks.
In addition to losing their jobs, thousands of Enron employees saw their 401 (k) retirement savings accounts, heavily invested in Enron stock, plummet in line with the dizzying downward spiral in the company’s stock price.
Enron paid all matching contributions to employees’ funds with Enron shares which employees had to hold until they turned 50. Many employees also used their own money to buy additional Enron stock, saying management had encouraged them to do so with their bullish comments about the company’s prospects.
The AFL-CIO Executive Council, the federation’s governing body, adopted a resolution on Wednesday calling on Congress, President Bush and federal regulators to adopt reforms to protect workers’ retirement security and to make corporate executives and directors more accountable for their actions.
The Enron bankruptcy has exposed vulnerabilities in workers’ retirement security and has also focused attention on proposals to privatize Social Security, replacing the present system of guaranteed benefits with individual accounts, the motion said.
The AFL-CIO said U.S. bankruptcy law should be changed to give workers’ claims for severance and pension benefits parity with the claims of other creditors.
The labor federation said it planned to “aggressively promote” traditional defined-benefit pension plans as the safest way to provide financial security for retired workers.
Defined contribution plans, such as 401(k) accounts, have been gaining ground over traditional pension plans in recent years as vehicles for retirement savings.