Eircom to shed 1,000 jobs as staff agree pay cut of €200
Indebted firm 'encouraged' by union vote on cost-cutting plan
Published 01/04/2011 | 05:00
Thousands of staff at debt-laden Eircom have voted in favour of pay cuts of up to €200 a month but executives are still planning to introduce a radical plan to shed 1,000 jobs over the next three years.
The pay cuts are expected to achieve savings of €92m over three years but Eircom has debts of €3.8bn.
A 10pc pay cut will be achieved by reduced working hours as part of the cost-cutting package.
Members of the Communications Workers Union, the biggest in the telecoms firm, voted 1,908 in favour and 1,388 against the proposals.
The cuts affect 4,000 unionised staff at the company.
And the cost-cutting plan comes at a critical time for the firm which is under pressure from its lenders.
Sources close to Eircom told the Irish Independent yesterday that -- with a total of 6,000 full-time workers and 1,000 contractors -- the company was still over-staffed, despite recent redundancy programmes at the firm.
"To achieve the cuts we need, there will be more losses and we expect in the region of 1,000 new voluntary redundancies over the next three years," the source said.
Company chief executive Paul Donovan welcomed the move by staff yesterday.
"It is extremely encouraging to know that our employees throughout the organisation are prepared to make difficult but necessary decisions to help secure the long-term financial future of the company," he said.
Eircom's main lenders also want the company to come up with a business plan before they begin discussions on how the firm's debt pile can be renegotiated.
The company's biggest lender, Dublin-based Harbourmaster, has joined forces with other debt holders to form a committee that will negotiate with its owners.
Eircom's majority shareholder is Singapore Technologies Telemedia but since it was privatised in 1999 it has had a string of owners.
Its previous owner, Australian investment fund Babcock & Brown Capital, did a €1.7bn restructuring which added to the company's debts.
Recent figures show that the firm is struggling to maintain market share in a very competitive environment, while its revenues have also taken a hit.